S. Hrg. 109–246

THE DEFENSE TRAVEL SYSTEM: BOON OR

BOONDOGGLE?

HEARING

BEFORE THE

PERMANENT SUBCOMMITTEE ON INVESTIGATIONS

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

SEPTEMBER 29, 2005

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs

(

THE DEFENSE TRAVEL SYSTEM: BOON OR BOONDOGGLE?

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Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

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24–241 PDF 2006

S. Hrg. 109–246

THE DEFENSE TRAVEL SYSTEM: BOON OR

BOONDOGGLE?

HEARING

BEFORE THE

PERMANENT SUBCOMMITTEE ON INVESTIGATIONS

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

SEPTEMBER 29, 2005

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs

(

(II)

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

SUSAN M. COLLINS, Maine, Chairman 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

NORM COLEMAN, Minnesota 

TOM COBURN, Oklahoma 

LINCOLN D. CHAFEE, Rhode Island 

ROBERT F. BENNETT, Utah 

PETE V. DOMENICI, New Mexico 

JOHN W. WARNER, Virginia 

JOSEPH I. LIEBERMAN, Connecticut 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK DAYTON, Minnesota 

FRANK LAUTENBERG, New Jersey 

MARK PRYOR, Arkansas

MICHAEL D. BOPP, Staff Director and Chief Counsel 

JOYCE A. RECHTSCHAFFEN, Minority Staff Director and Chief Counsel 

TRINA D. TYRER, Chief Clerk 

PERMANENT SUBCOMMITTEE ON INVESTIGATIONS 

NORM COLEMAN, Minnesota, Chairman 

TED STEVENS, Alaska 

TOM COBURN, Oklahoma 

LINCOLN D. CHAFEE, Rhode Island 

ROBERT F. BENNETT, Utah 

PETE V. DOMENICI, New Mexico 

JOHN W. WARNER, Virginia 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK DAYTON, Minnesota 

FRANK LAUTENBERG, New Jersey 

MARK PRYOR, Arkansas

RAYMOND V. SHEPHERD, III, Staff Director and Chief Counsel 

C. JAY JENNINGS, Senior Investigator 

ELISE J. BEAN, Minority Staff Director and Chief Counsel 

MARY D. ROBERTSON, Chief Clerk 

(III)

C O N T E N T S 

Opening statements: Page 

Senator Coleman .............................................................................................. 1

Senator Coburn ................................................................................................. 5

Senator Levin .................................................................................................... 18

Senator Carper ................................................................................................. 19

WITNESSES 

THURSDAY, SEPTEMBER 29, 2005

Hon. Charles Grassley, a U.S. Senator from the State of Iowa ........................... 3

Thomas A. Schatz, President, Citizens Against Government Waste .................. 8

Robert Langsfeld, Partner, The Corporate Solutions Group, Menlo Park, California ..................................................................................................................... 9

Thomas F. Gimble, Acting Inspector General, U.S. Department of Defense ...... 25

Scott A. Comes, Director, Strategic and Information Programs Division, Program Analysis and Evaluation, U.S. Department of Defense .......................... 27

McCoy Williams, Director, Financial Management and Assurance, U.S. Government Accountability Office ............................................................................. 28

Zack E. Gaddy, Director, Defense Finance and Accounting Service, U.S. Department of Defense ............................................................................................. 29

ALPHABETICAL LIST OF WITNESSES

Comes, Scott A.: 

Testimony .......................................................................................................... 27

Gaddy, Zack E.: 

Testimony .......................................................................................................... 29

Prepared statement .......................................................................................... 93

Gimble, Thomas F.: 

Testimony .......................................................................................................... 25

Prepared statement .......................................................................................... 60

Grassley, Hon. Charles: 

Testimony .......................................................................................................... 3

Langsfeld, Robert: 

Testimony .......................................................................................................... 9

Prepared statement with attachments ........................................................... 49

Schatz, Thomas A: 

Testimony .......................................................................................................... 8

Prepared statement .......................................................................................... 41

Williams, McCoy: 

Testimony .......................................................................................................... 28

Prepared statement .......................................................................................... 65

EXHIBITS 

1. Through the Looking Glass, a Citizens Against Government Waste Special Report: Defense Travel System: The Twilight Zone of Travel, September 28, 2004 ................................................................................................ 100

2. Report of The Corporate Solutions Group, eTravel/DTS Fare Audit, Task 

‘‘A,’’ Report and Findings, Executive Summary, Revision III, May 5, 2005 . 115

3. Report of The Corporate Solutions Group, eTravel/DTS Fare Audit, Task 

‘‘A,’’ Report and Findings, Revision IV, May 5, 2005 ..................................... 121

4. Report of The Corporate Solutions Group, eTravel/DTS Fare Audit, Task 

‘‘B,’’ Report and Findings, Revision I, April 18, 2005 .................................... 246

Page

IV

5. Department of Defense Inspector General Report, Allegations to the Defense Hotline on the Management of the Defense Travel System, July 

1, 2002 ............................................................................................................... 307

6. Department of Defense Program Analysis and Evaluation (PA&E) Division Report, Defense Travel System Cost Effectiveness Review, December 

2002 .................................................................................................................... 356

7. Department of Defense Project Management Office rebuttal to DOD 

PA&E’S December 2002 Report, Defense Travel System Cost Effectiveness 

Review ................................................................................................................ 373

8. Correspondence from David S. C. Chu, Under Secretary of Defense, to 

The Honorable Norm Coleman, Chairman, Permanent Subcommittee on 

Investigations, dated September 29, 2005, regarding Defense Travel System ..................................................................................................................... 375

9. Responses to supplemental questions for the record submitted to Thomas 

Schatz, President, Citizens Against Government Waste ............................... 376

10. Responses to supplemental questions for the record submitted to Robert 

Langsfeld, Partner, The Corporate Solutions Group ..................................... 377

11. Responses to supplemental questions for the record submitted to Thomas 

F. Gimble, Acting Inspector General, U.S. Department of Defense ............. 381

12. Responses to supplemental questions for the record submitted to McCoy 

Williams, Director, Financial Management and Assurance, Government 

Accountability Office ........................................................................................ 386

13. Responses to supplemental questions for the record submitted to Dr. 

Scott A. Comes, Director, Strategic and Information Programs Division, 

Program Analysis and Evaluation, U.S. Department of Defense ................. 391

(1)

THE DEFENSE TRAVEL SYSTEM: BOON OR 

BOONDOGGLE? 

THURSDAY, SEPTEMBER 29, 2005

U.S. SENATE, PERMANENT SUBCOMMITTEE ON INVESTIGATIONS, COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:02 a.m., in 

room 342, Dirksen Senate Office Building, Hon. Norm Coleman, 

Chairman of the Subcommittee, presiding. 

Present: Senators Coleman, Coburn, Levin, and Carper. 

Staff Present: Raymond V. Shepherd, III, Staff Director and 

Chief Counsel; C. Jay Jennings, Senior Investigator; Leland 

Erickson, Counsel; Mary D. Robertson, Chief Clerk; Melissa 

Stalder, Intern; Melissa Audick, Intern; and Peter Levine (Senator 

Levin/Armed Services Committee). 

OPENING STATEMENT OF CHAIRMAN COLEMAN 

Senator COLEMAN. This hearing of the Permanent Subcommittee 

on Investigations is called to order. 

Our first witness will be Senator Grassley. What I am going to 

do is begin my opening statement, but when my colleague comes, 

we always defer to the Chairman of the Finance Committee and we 

will have him give his statement and then move on to the other 

panels. 

I should also note that we have a vote at 11—I will have to leave 

at 11:15. We need to be in our seats by 11:20 and then a vote on 

the Roberts nomination at 11:30, so I will adjourn the hearing and 

after that vote, we will reconvene and finish up the testimony. So 

we will be adjourning at 11:15. 

Good morning and thank you for attending today’s hearing. 

Nobel Prize winning economist Milton Friedman once stated, ‘‘Governments never learn, only people learn.’’ I disagree. My job as 

Chairman of the Permanent Subcommittee on Investigations is to 

ensure that our government learns as well. Simply put, that is why 

we are having this hearing, ‘‘The Defense Travel System: Boon or 

Boondoggle?’’ It follows from other investigations this Subcommittee has held on Defense Department waste, fraud, and 

abuse. 

In November 2003, this Subcommittee conducted a hearing on 

the Department of Defense’s use of first and business class airline 

travel. At the hearing, it was determined that DOD had not properly authorized or justified 73 percent of the first and business 

2

class travel undertaken in the fiscal years 2001 and 2002. DOD 

spent $124 million on over 68,000 tickets during these 2 years. The 

improper authorization and justification of these tickets resulted in 

the improper expenditure of over $60 million in 2 years. 

On February 12, 2004, the Subcommittee held a hearing on 

‘‘DOD Contractors Who Cheat on Their Taxes.’’ The hearing examined the failure to collect unpaid taxes owed by contractors doing 

business with the Department of Defense and getting paid with 

taxpayer dollars. The Subcommittee determined that 27,000 DOD 

contractors owed $3 billion in unpaid taxes. The taxes were not collected because DOD was not validating contractors’ taxpayer numbers and was not referring contractor payments to the Financial 

Management Service to identify unpaid tax debt. 

This hearing is designed to determine if DTS is the windfall to 

DOD travel that it was promised to be or simply a waste of taxpayers’ money. I have repeatedly asked DOD about DTS because 

there are credible allegations that DTS has very serious problems. 

Specifically, I have heard that DTS is 4 years behind schedule; is 

deployed to barely half of the 11,000 DOD travel sites; has grown 

in cost from $273 million to $500 million—and even for government 

that is a lot of money—it does not identify the lowest available airline fares; it does not identify all available lodging facilities that 

offer government rates; and has not generated the projected cost 

savings for travel agent services and voucher processing. 

I am particularly concerned with DOD’s failure to realize the projected cost savings for travel agent services. This has occurred because DOD has made the use of DTS voluntary rather than mandatory at those sites where it has been deployed. The current utilization rate for DTS at those sites is about 5 percent. DOD pays travel 

agents about $5 for DTS transaction as compared to about $25 for 

a traditional transaction. Thus, 95 percent of DOD’s travel transactions are costing DOD $20 more for each transaction. This translates into millions of dollars that DOD is wasting in realized cost 

savings. 

On three separate occasions over the past 2 years, I have asked 

DOD to respond to these allegations. DOD has been unresponsive. 

For example, I asked DOD if DTS always finds the lowest available 

airfare. DOD begged the question by stating that DTS displays 

GSA contracted city pair flights without stating that these are always the lowest cost fairs. 

Finally, on August 11, I sent a Chairman’s letter to the Secretary 

of Defense in which I laid out my concerns with DOD’s failure to 

respond to allegations about DTS. Further, I requested that the 

Secretary suspend further implementation of DTS until the questions about the system have been fully addressed and resolved. 

Let me be specific about that. One year and one day from today, 

the DTS contract will expire. Before DOD renews the DTS contract, 

the substantive problems and cost and benefit questions about DTS 

need to be fully resolved. To ensure that DTS is comprehensively 

and objectively reviewed, I have asked the Government Accountability Office and the DOD Inspector General to evaluate and report on DTS. I asked GAO to identify the problems that need to 

be addressed and I have asked the Inspector General to conduct a 

cost benefit analysis and determine if DTS will address DOD’s 

3

travel needs. Those evaluations and reports are to be concluded before the DTS contract is renewed and will provide the Secretary 

with the answers he needs to ensure that hundreds of millions of 

taxpayer dollars are not wasted on an inefficient travel system. 

That is a perfect entree to our first witness before this Subcommittee. I would like to welcome the Chairman of the Senate Finance Committee, Senator Charles Grassley. Senator Grassley testified at our November 2003 hearing on DOD’s improper use of first 

and business class airline travel. This was the first in a series of 

Subcommittee hearings that focused on waste, fraud, and abuse in 

the Department of Defense. 

Senator Grassley, I welcome you back to this Subcommittee. I 

know that you have a great interest and expertise in the subject 

matter of this hearing. You have worked aggressively over the 

years to expose waste, fraud, and abuse in government and I thank 

you for that focus and for that service and I thank you for your 

participation in today’s hearing and look forward to hearing your 

testimony. 

Senator Grassley, you may proceed. 

TESTIMONY OF HON. CHARLES GRASSLEY, A U.S. SENATOR 

FROM THE STATE OF IOWA 

Senator GRASSLEY. I want to thank you, too. You are doing a 

very fine job in the leadership of this Subcommittee in this area 

and in a lot of other areas, as well. I want to thank you for doing 

that. Your Subcommittee is a premier committee for getting to the 

bottom of a lot of problems that we have in government and bringing them to light and finding solutions for them, and I am sure the 

same end result will come as a result of what we are doing here. 

Although, as your statement probably made clear, as well as my 

statement will make clear, it is kind of frustrating that we think 

we make progress 2 or 3 years ago and then review it now and you 

wonder whether you have made any progress. 

As you said, I have been looking into waste, fraud, and abuse in 

the Department of Defense travel for several years. I started with 

charge cards, travel cards, and purchase cards. I think we are all 

very familiar now with the stories of inappropriate purchases made 

with government charge cards. That led to concerns about other aspects of Department of Defense travel. 

Mr. Chairman, you and I and others asked the Government Accountability Office to look into improper premium class air travel 

and I testified at a hearing before this Subcommittee in November 

2003. We also asked the GAO to issue reports on unused airline 

tickets going to waste as well as fraudulent travel claims. I also 

testified at a hearing before the full Governmental Affairs Committee on those issues in June 2004. At both of those hearings, representatives of the Department of Defense came in here with very 

embarrassing testimony, promising to do better. They said that 

there was this new computer system called the Defense Travel System that will fix all the problems. 

It happens that by that time, DTS already had problems that we 

were probably unaware of at that time, but we are now very aware 

of. It was originally supposed to be fully implemented by 2002. As 

this deadline approached, the Department of Defense restructured 

4

the contract and I assume they were doing it because they saw 

problems with it at that particular time. But anyway, it was stalled 

through the restructuring of the contract. The taxpayers, of course, 

are now paying most of the development costs and the new deadline to have DTS fully implemented, it is my understanding, is 

going to be at the end of the year 2006. 

In July 2003, the Inspector General of Defense issued a report 

criticizing DTS for being behind schedule and over the projected 

cost. In 2003, the Department of Defense Program Analysis and 

Evaluation Division completed a report questioning whether DTS 

was the most cost-effective solution to these problems that you and 

I have brought forward, but it still survived. 

Despite all its problems, we then have lots of taxpayers’ money 

being sunk into DTS. I want to know, as a result of all these expenditures, and I don’t ask questions like this just of the Department of Defense but recently I asked them of the Department of 

Justice and FBI on one of their computer systems, that we need to 

know what the taxpayers are getting for their money. Is there any 

end to getting to the bottom of the problems of this program? And 

will we have something functioning and getting our taxpayers’ 

money’s worth, or was it a big mistake right from the very beginning? In the case of the FBI, they started all over again. 

I think we need to ask of DTS, really, is it a silver bullet that 

will solve all of the DOD’s travel problems? Will it prevent improper premium-class travel? Will it catch unused airline tickets so 

that refunds can be obtained? Will it prevent fraudulent travel 

claims from being processed? 

These are all questions that you and I have asked before, Mr. 

Chairman, and we still don’t have a system in place that is going 

to answer these, and that is why we have the problems brought to 

our attention and the waste of taxpayers’ money. 

I understand now that the Government Accountability Office is 

going to testify that DTS can be helpful in some of these areas, although it is clearly not a cure-all as it was advertised to be. Now, 

maybe the testimony will say something different, but that is what 

I understand will be the gist of it. 

Moreover, I understand that DTS currently cannot be relied on 

to find the lowest available airfare consistent with the travel requirements of the Department of Defense. Now, that is really, 

when you get right down to it, if you are going to have a new control system in place, that is a pretty basic function that we ought 

to expect from a travel system. 

Since taxpayers’ money went into the development of DTS, I 

think we should also know what we purchased. Usually, when the 

government pays to have something developed, it owns the final 

product. That doesn’t appear to be the case as you read the DTS 

contract. So what exactly did the government buy with all of this 

money? 

Finally, we have to ask, is DTS the most cost-effective option for 

DOD travel at this point? 

So, Mr. Chairman, I, of course, commend you for holding this 

hearing. I know that as a result of this hearing, you will get answers to these questions and hopefully enough has been learned 

from the mistakes of the past that whatever we are told today and 

5

the deadlines that are in place to accomplish the goals that we 

want to accomplish will be met. It will take your watchdogging, as 

you have done, to make sure that happens. I know you know that 

you have to be ever vigilant when you are doing oversight, and I 

thank you for being that way. 

I have said everything I can say at this point. I might have something to say after I heard other testimony, but I won’t be able to 

come back. 

Senator COLEMAN. Senator Grassley, first, again, I want to thank 

you. You certainly inspired me in the work that we are doing here 

from your efforts, and you have laid out the questions that I hope 

we get some answers to today, or at least begin a process. 

My concern on this, you talked about taxpayers paying for development costs. I don’t think that was the original intent when this 

system was contracted out. You indicate that we hear now, as I 

have reviewed the testimony and the reports, that it may be helpful, but if you are spending $500 million on something that originally was a $263 million program, it better be more than helpful. 

It should be delivering what you think it should deliver. 

You have laid out the questions. What about premium-class travel? Does it deal with unused tickets? Does it stop fraudulent travel? 

Does it provide the lowest-available airfare? And then, ultimately, 

your last comment, is it most cost effective? 

I am hopeful that we are engaged in a process now that will help 

us get responses to that and determine whether our taxpayer dollars are being used wisely. If they are not, then we have to do 

something about it. 

Again, I thank you for your leadership in this area and I look forward to working with you. I say this in my opening statement. This 

is part of a process. This is not simply a hearing and we are done. 

We will have some responses, but we will continue to look at this 

issue and move forward on it. So again, I thank you for your leadership and then for your testimony today. 

Senator GRASSLEY. And if need be, I have a couple of good staff 

people. If your staff needs any help, I would be glad to have them 

involved, but I know you have very good staff, too. 

Senator COLEMAN. I look forward to working with you on this 

issue, Mr. Chairman. Thank you so much, Senator Grassley. 

Senator GRASSLEY. Thank you. 

Senator COLEMAN. Senator Coburn. 

OPENING STATEMENT OF SENATOR COBURN 

Senator COBURN. Senator, I appreciate you holding this hearing. 

The second week I was a U.S. Senator, I became involved in this. 

I won’t be able to stay for the hearing and I don’t have a formal 

opening statement other than to say I am highly concerned about 

procurement methods, transparency, and accountability in our government. Our Subcommittee has been holding hearings. We have 

had 14 thus far in terms of oversight, and we will probably have 

10 more before the year is out on oversight. 

I would just ask unanimous consent to submit five pages of questions for the witnesses today that I would like to submit and have 

answers back within 2 weeks. 

Senator COLEMAN. Without objection, that will be done. 

6

Senator COBURN. I thank the Chairman and I thank him for 

holding this hearing. 

Senator COLEMAN. Thank you, Senator Coburn. I am surrounded 

by Chairman Grassley and Senator Coburn, who both have been 

dogged in their determination to protect taxpayer dollars and deal 

with fraud, waste, and abuse, and so I greatly appreciate your interest, your participation, and the leadership that you are providing with your Subcommittees. So I look forward to working with 

you and we will get those questions to the witnesses and make 

sure that we have answers. Thank you. 

I am going to just finish with the rest of my opening statement 

and then we will call the first panel. 

DTS was expected to be a boon to DOD travel needs by cutting 

costs and red tape for DOD’s travelers. However, by 2001, the commercial off-the-shelf travel software that DOD had planned to use 

failed its operational tests, and it became clear that DOD would 

not be able to translate its concept into reality. 

Rather than terminating and rebidding the project, however, 

DOD restructured the DTS contract to develop a web-based travel 

system. This restructuring increased the projected costs of DTS, as 

I noted before, from $263 to $492 million. 

During this time, the DOD Inspector General began receiving 

complaints of DTS fraud and waste on its hotline. After numerous 

complaints, the IG initiated an audit of DTS. Of the nine complaints the Inspector General received, it was able to substantiate 

four of them. More importantly, the report concluded there was a 

substantial risk that DTS would not deliver a viable, integrated 

travel management system and initially recommended that funding 

for the development and deployment of DTS be suspended until a 

determination was made as to whether DTS was the most cost-effective solution to DOD travel needs. 

In response to the Inspector General’s report, the Controller 

tasked the Program Analysis and Evaluation Division (PA&E) with 

conducting a cost-benefit study and further agreed to abide by its 

findings. The study concluded that it could not verify that DTS provides the most cost-effective solution to DOD’s travel needs because 

there could be alternative solutions that are less expensive. Despite 

these findings, DOD decided to push ahead with DTS on October 

20, 2003. 

While DOD claims it has fully considered the Inspector General’s 

and PA&E’s concerns as part of its top-level management decision 

to go forward with DTS, I have seen no studies or reports that 

clearly address and resolve those concerns. Instead, I continue to 

see reports that question DTS’ effectiveness or hear allegations 

that the IG’s and the Program Analysis and Evaluation Division’s 

concerns have not been fully addressed. 

For example, the PA&E’s study raised the question about who 

owns the DTS, the contractor or the DOD. The ownership of DTS 

has both cost and competitive implications for DOD. Seven months 

after DOD’s decision to move forward, the Department of Justice 

informed Judge George W. Miller of the U.S. Court of Federal 

Claims that DTS belonged to the contractor and not to DOD, and 

that concern was raised by my colleague, Senator Grassley. This 

7

clearly is an issue that needs to be resolved. I expect to get some 

responsive answers from DOD on that issue. 

Today, we will hear testimony from some of the individuals and 

organizations that help to administer DTS or who have raised concerns about DTS’ costs and performance. They will share with us 

their concerns about DTS. 

We will also hear from representatives of the GAO, the DOD Inspector General, and the PA&E, who will testify about reports or 

studies they wrote that have questioned the costs and benefits that 

DTS offers DOD. 

Finally, we will hear from the Controller and Director of the Defense Finance and Accounting Service, who are the principal officials responsible for DTS. 

Before hundreds of millions of additional taxpayer dollars are unnecessarily wasted, it is imperative that DOD adequately address 

the many questions that have been raised regarding the cost effectiveness of DTS. I expect DOD to provide answers to these questions during today’s hearing. My colleague, Senator Coburn, and 

others also have that same expectation. 

With that, we will call our first panel and welcome our first witnesses today. Actually, it is technically our second panel since Senator Grassley was a panel in and of himself. 

I would like to welcome Thomas Schatz, the President of the Citizens Against Government Waste located here in Washington, DC, 

and Robert Langsfeld, Partner of the Corporate Solutions Group of 

Menlo Park, California. I appreciate your attendance, gentlemen, 

at today’s hearing and look forward to your testimony and assessment of the Defense Travel System. 

Before we begin, pursuant to Rule 6, all witnesses who testify before the Subcommittee are required to be sworn in. At this time, 

I would ask you to rise and raise your right hand. 

Do you swear that the testimony you are about to give before the 

Subcommittee will be the truth, the whole truth, and nothing but 

the truth, so help you, God? 

Mr. SCHATZ. I do. 

Mr. LANGSFELD. I do. 

Senator COLEMAN. Thank you, gentlemen. We will have a time 

system here. A minute before you should be done, before the red 

light comes on, you will see the light change from green to yellow. 

If you desire, we will certainly have your full written testimony entered into the record, but we urge you to try to stay within the time 

limits. As I said, we have a vote and we will have to adjourn at 

a set time today. 

Mr. Schatz, why don’t you go first, followed by Mr. Langsfeld, 

and then after we have heard the testimony, we will turn to questions. Mr. Schatz, you may proceed. 

8

1The prepared statement of Mr. Schatz appears in the Appendix on page 41. 

2See Exhibit No. 1, which appears in the Appendix on page 100. 

TESTIMONY OF THOMAS A. SCHATZ,1 PRESIDENT, CITIZENS 

AGAINST GOVERNMENT WASTE 

Mr. SCHATZ. Thank you very much, Mr. Chairman. I congratulate you and your staff and certainly Senator Coburn and his staff 

for helping to bring this to this level of a hearing. 

We issued a report 1 year and 1 day ago,2 September 28 of last 

year, on the Defense Travel System, so we very much appreciate 

the effort that has been made and the information that you have 

provided. You provided an excellent summary of what has occurred 

and why we are where we are today, so I want to take just a 

minute or two to talk about our organization, what we have done, 

and what we would like answers to, as well, because the answers 

do lie with the people that are in charge of the system, and that 

would be the Department of Defense, the Inspector General, PA&E, 

and others that are the ones that should be providing the information. We are certainly disappointed that we have not gotten, or you 

have not gotten a more prompt response to your questions. Perhaps 

that might have avoided the ongoing issues that surround DTS. 

Citizens Against Government Waste was created 21 years ago 

following the Grace Commission report. Much of what the Grace 

Commission and, in turn, CAGW looked at is waste, mismanagement, and inefficiency, in particular in the Department of Defense 

and in procurement. We have been following these issues for many 

years and we know that you and your Subcommittee are quite interested, as well. 

The original rational for DTS actually was something the Grace 

Commission recommended, a more cost-effective way to manage 

travel at the Department of Defense. But on the way to this webbased travel system, there were several bumps in the road. 

You have already described the original contract, which was supposed to provide an end-to-end web-based travel system. That 

means a system that could track authorization, produce tickets and 

vouchers, track expenses, and reimburse travelers. We know that 

parts of that are being done, but not all of that apparently is being 

done. And, of course, the effort to take the commercial off-the-shelf 

system and modify it did not work. 

The other part that we find questionable from a taxpayer standpoint is the original intent to have Northrop Grumman be paid following full deployment of the system, meaning installation, but not 

necessarily usage, at 11,000 DOD facilities. Then they would be 

paid only if a transaction was completed. That cost was supposed 

to be $263 million, and development was supposed to be paid for 

by the contractor. 

Instead, following the restructuring, which the U.S. Court of 

Claims said violated the Competition in Contracting Act, everything was changed so that DOD paid Northrop for development. 

Some have suggested that DOD may end up paying the same 

amount, $263 million, but there is a difference between development and a per-transaction reimbursement after development. In 

other words, there is no guarantee that Northrop ever would have 

been paid that full amount because that would have required full 

9

1The prepared statement of Mr. Langsfeld appears in the Appendix on page 49. 

usage, and we know from what you have said and from what we 

have heard and certainly other studies that usage is, first of all, 

not required or mandated, and second of all, many who are using 

it don’t necessarily like using it. 

That is one of the things that we would like an answer to, is why 

was this written in a way that didn’t require full usage. Why would 

you spend hundreds of millions of dollars on a system and then not 

require the Department of Defense to utilize it? 

We have certainly examined and heard of many other problems 

with software development at the Federal level. Senator Grassley 

mentioned the Virtual Casefile at the FBI. Eventually, they pulled 

the plug on that. That is at least a question to consider here, or 

certainly what we might do going forward. 

The other question, one that you asked, is who owns it? The 

question may be why the GSA is paying the contractor and not 

paying DOD and what is going to go on once it is fully developed. 

There are also some questions which haven’t been addressed about 

who was involved in the decisionmaking process, some individuals 

at DOD. We are not suggesting anything, but we hope that is part 

of your investigation, as to who was involved in the final decision 

and when that occurred. 

Senator Coburn is considering an amendment to move this from 

the DTS over to the e-travel system at GSA, another question that 

should be examined by the Subcommittee. 

The most recent GAO report, issued in March, and I know they are going to comment, said that the full cost would be $4.3 billion, 

or $4.39 billion, so there are lots of numbers being thrown around. 

We would like to know which is which. That report also said the 

National Guard is having major problems in terms of mobilization 

vouchers and authorizations, so that also should be further examined by the Subcommittee. 

Mr. Chairman, the bottom line is whether taxpayers will ever 

know what they are getting for their money and whether or not we 

did waste or didn’t waste hundreds of millions of dollars now and 

in the future. 

Thank you. I will be happy to answer any questions. 

Senator COLEMAN. Thank you very much, Mr. Schatz. Mr. 

Langsfeld, you may proceed. 

TESTIMONY OF ROBERT LANGSFELD,1 PARTNER, THE 

CORPORATE SOLUTIONS GROUP, MENLO PARK, CALIFORNIA 

Mr. LANGSFELD. Good morning, Mr. Chairman. Thank you for 

having me here today. I am the founding partner of The Corporate 

Solutions Group. We are a consulting firm providing services to the 

government and corporate organizations. I also request that a full 

copy of the presentation be placed into the record, sir. 

Senator COLEMAN. Without objection. 

Mr. LANGSFELD. Thank you. I am here today because we were 

awarded a task order by GSA to perform an audit and study the 

Contract City Pair Program, the DTS program, and the three ETS 

programs. We were asked to determine, among other things, 

whether DTS actually displayed the best policy-compliant fares 

10

that are available at the time of the booking. The study was intended to provide an accurate, independent assessment of fare 

presentations for each of the tested systems. 

First, our team was asked to perform an initial review of the inventory platform. That is, we were asked to make sure that all the 

Government’s City Pairs are in the booking systems. We have prepared a slide that shows how the City Pairs make their way into 

the database, and as you can see from the slide, the GSA conducts 

procurement and then awards the City Pair contracts to the winning airlines. The rates are then sent to a processing group, the 

Airline Tariff Publishing Company, and then loaded into the respective global distribution systems, such as Sabre, Galileo, 

Worldspan, and Amadeus. Once the fares are in the GDS, the DTS 

and ETS web-based travel systems access that information, process 

it, and display it to the Federal traveler. 

During our review of this inventory, we found that 7 to 8 percent 

of all these fares either were not loaded correctly or were not loaded at all into the GDS. Therefore, they were not available for DTS 

to capture and display and for the DTS traveler to select. 

When this anomaly was disclosed to GSA, they responded that 

they considered this to be totally acceptable, at 8 percent. GSA also 

refused to provide our company with the source documentation to 

verify the fares and who was responsible for those issues. We were 

told to look at the websites, the GSA website to find the fares, and 

without that, we were not able to provide an opinion without 

source documentation. 

The next review was a review of the domestic 25 City Pairs, and 

we found a variety of errors and omissions and issues. However, 

once these problems were reported to DTS and GSA, the project 

management personnel continued to change and reduce our review 

and the performance scope of our contract significantly. These 

changes to our original assignment had the effect of significantly 

reducing our ability to report variances on available airfares, commercially available airfares, and competitive airfares that might be 

lower than the City Pair Program. 

What is worse, the GSA and DTS project management officials 

would not allow our auditors to access the systems to be tested, so 

therefore, all we could look at would be the displays of the systems, 

not how they functioned or why. 

I direct your attention to the charts we have included in our report, and in this first chart over here, of the top 25 domestic City 

Pairs, the YCA code is used to designate unrestricted coach class 

fares, which are the CPP program, and the dash–CAs, as they call 

them, are used for capacity control for the City Pair Program. 

Table 1 shows that the four government systems displayed between 35 and 90 percent of all applicable CPP fares in the 25 markets. Specifically in the case of DTS, only 61 of 187 fares, or 33 percent, were listed by DTS. Other systems showed between 35 and 

90 percent of the fares displayed. DTS only displayed, therefore, 

one-third of the itineraries that were available to the Federal traveler, or put another way, two-thirds of the time, the applicable City 

Pair fares were not displayed, which is a major operational deficiency in our perspective. 

11

Also, all available fares, including the rest of the CPP fares and 

lower-cost fares, are simply not being displayed on a consistent 

basis, i.e., that is, all available fares are not listed, all CPP fares 

are not listed, and the lowest-cost airfares are not listed. 

We were very surprised to find that, when we presented, the 

DTS and GSA sought to downplay the issues and the results. We 

were asked to change some of our findings to give a better result. 

We refused to do that and they proceeded to terminate our contract 

on that review. 

The overriding concern I have is that when DTS deficiencies 

were identified, the government chose to change, suppress, or modify the results in order to downplay the severity of the issues and 

to disclaim responsibility. You will undoubtedly hear government 

personnel try to make excuses for the findings, but it was their settings. They set the conditions for the audit and they determined 

how best to do it. 

Our opinion is the government needs to have a continuing quality control audit in place for these programs and systems. It is 

painfully apparent that such reviews need to be on independent 

and objective areas outside of the GSA and DTS office. And in 

these times of budgetary concerns, the constraints on the performance of the system such as these are paramount. We hope that this 

Subcommittee and these hearings may result in the viable and reliable process for the use of the government, and in this case, the 

government traveler. 

Thank you for allowing me to participate in this hearing. I am 

prepared to answer your questions. 

Senator COLEMAN. Thank you very much, Mr. Langsfeld. I will 

mirror what you said about in times of budgetary concerns, and 

these are clearly times of budgetary concerns. I voted for $62 billion in appropriations for funding Katrina relief, which is clearly 

the greatest natural disaster in the history of this country. We’ll 

see how that money is spent and we need to track that very carefully. 

But we’re in the midst of a war. There are great challenges, deficits rising, and the economy impacted by disasters. So I think we 

have a special responsibility in these times to do what we’re doing. 

I appreciate your work here. 

I want to step back, first. Can you explain the City Pair, what 

that means? 

Mr. LANGSFELD. Yes, sir. I’d be glad to. 

City Pair is a program administered by the General Service Administration. That is to have contracts established between the airlines and the U.S. Government for going from point A to point B, 

such as National to Pittsburgh, Dulles to Atlanta, and so forth. 

Those would be considered City Pairs or one-way fares. There are 

about 4,000 of those negotiated on an ongoing basis annually, with 

the airlines by GSA. And therefore, the government traveler has 

access to those fares. 

Senator COLEMAN. You’re getting access to—you know how much 

it costs, you’ve got to get a set amount to a particular city and then 

you can either use that——

Mr. LANGSFELD. As a baseline. 

Senator COLEMAN. As a baseline. 

12

1See Table 1 attached to prepared remarks of Robert Langsfeld, which appears in the Appendix on page 54 and 59. 

Mr. LANGSFELD. Yes, sir. 

Senator COLEMAN. What I’m hearing from your testimony is that 

in at least 8 percent of the cases, the city pairs weren’t even loaded 

into the program, so there’s no baseline. 

Mr. LANGSFELD. There’s no baseline. That is correct, sir. 

Senator COLEMAN. So there’s no way to——

Mr. LANGSFELD. There’s no way to get to it. 

Senator COLEMAN. Your other testimony is that you’re talking 

about all fares not displayed and not listed. Why? What’s missing 

here? 

Mr. LANGSFELD. There is something missing, sir, but we weren’t 

permitted access to find out those answers. Our scope was limited 

to only taking an audit of those City Pair Programs, those CPP 

program rates, those 4,000 we just discussed, and to say were they 

displayed to the travelers through the various systems, in this case 

DTS, or not. If there were other lower fares they might not be displayed. 

For example, to clarify and answer your question specifically, in 

the case of let’s say Albuquerque to Los Angeles, we found a City 

Pair that is $153 one way between Albuquerque and Los Angeles. 

That’s the negotiated City Pair, as we discussed it. 

The DTS system found prices anywhere between $120 and $300. 

And the GovTrip system pretty much similar, which is another 

Northrop system provided under GSA contract. 

Under the E2 solutions provided by Carlson, they found an $87 

comparative rates and unrestricted walk-up fares. 

So in essence, 50 percent less and it wasn’t displayed. 

Senator COLEMAN. The other thing I want to understand is you 

indicate 7 or 8 percent of all fares are not fully loaded in the City 

Pair Program, but then your Table 11 indicates that only one-third 

of available government fares are listed. Can you help me understand the difference between the one-third figure versus the 7 to 

8 percent? 

Mr. LANGSFELD. Yes, sir. 

First of all, the 7 to 8 percent means that even out of the 100 

percent, if you may, that they could possibly look at, they won’t 

find, based on our sample, 7 to 8 percent of those regardless. So 

that means that the traveler, if they’re going from Point A to Point 

B, will be paying commercial fare rather than negotiated fare that’s 

established. That would reduce by definition even the amount of 

fares that these different systems can find. Their population is essentially 92 percent of whatever is out there. 

The second part of your question, sir, is that of 187 on that chart, 

as you can note, out of the 187 possible City Pairs that were found 

between Point A and Point B, that only one-third of them were 

ever displayed by the DTS system and the other system somewhere 

between 35 percent and 90 percent of them were displayed. 

So there is something other there that’s editing that result that 

we weren’t permitted to find. 

13

Senator COLEMAN. I’m trying to get to a solution on that. What 

I’m hearing is that the reaction you’re getting from the government 

folks was it didn’t seem like there was a lot of concern. 

Mr. LANGSFELD. That would be a correct statement. 

Senator COLEMAN. Your testimony is very strong when you use 

words like change, suppress, down play. Those are very serious 

concerns. Do you have any reason to qualify that at all? 

Mr. LANGSFELD. I have no reason to qualify that statement, sir. 

Senator COLEMAN. DOD has very optimistic projected cost savings on this program. Can you respond to that issue? Can you give 

me some information? I don’t have the numbers in front of me but 

I know they have some very optimistic cost savings. What I’m trying to figure out, as I listen to the testimony, is how do you get 

cost savings in a system in which you’ve got 33 percent of total 

fares displayed being used? How do you get there? What’s the basis 

for that? 

Mr. LANGSFELD. If I may be permitted, I’ll answer that in two 

parts, sir. The first would be a reverse question for you, or a rhetorical question, of course. And that is how can you display 100 

percent when you only have 33 percent in front of you? So you’ll 

never be able to achieve those results regardless of any steps that 

you take, given the current condition of the system. 

The second part of it is all of the assumptions that I’ve seen on 

the DTS system and the ETS systems are anywhere between an 80 

and 95 percent adoption. Therefore, that’s 85 to 90 percent of all 

the Federal travelers using that system. 

As you provided in your opening statements, 4 or 5 percent are 

where they are today. To get from Point A to Point B, in the condition that the systems are in, I think is an unrealistic goal. And 

therefore, your return on investment and your analysis has to be 

adjusted and possibly significantly. 

Senator COLEMAN. That leads into my question to Mr. Schatz. 

One of my concerns that I’m struggling with here, on the one hand 

it’s clear that we’re not having full utilization. Mr. Schatz, you 

talked about that. 

But the next question is even if we have full utilization in a system that’s fundamentally flawed, are we going to get the cost savings we’re talking about? Mr. Schatz, you talked about the system 

being underutilized. Do you have any sense that if it was fully utilized that we’d be achieving the cost savings that have been projected? 

Mr. SCHATZ. Certainly not based on what Mr. Langsfeld just 

said. There’s a lot that remains to be done in order to get to where 

they originally intended to be. Of course, that intention meant that 

this system would have been completed about 4 years ago. So we’re 

behind schedule, we don’t have full utilization, there’s no requirement for full utilization. And even if you had, apparently from the 

study, you don’t even have all of the available information to get 

the best fare and the greatest amount of information. 

The other point to recall is that this was supposed to be an endto-end system. Authorizations and vouchers may be what they’re 

doing now but it’s supposed to do a lot more. 

So you’ve got cost overruns, lack of information, lack of usage, all 

adding up to some number. As I said, GAO in March said it could 

14

1See Exhibit No. 1, which appears in the Appendix on page 100. 

be $4.39 billion. We’ve seen $470 million, $491 million, $559 million. I’d like an answer. I know you’d like an answer as to what 

the cost is, how do we get greater usage if the system, in fact, is 

the right system and does perform everything it’s supposed to? 

And then we might be able to determine how much it’s really 

going to cost or save, if anything. 

Senator COLEMAN. When we say end-to-end system, it’s lowest 

cost air fare, lodging facilities, some of the concerns that Senator 

Grassley raised, tracking unused tickets. There’s more than just 

the lowest cost fare is involved in this; is this correct? 

Mr. SCHATZ. That’s correct. It would be something that you 

would have if you were a company trying to come up with a system 

that you, as an organization, could produce and track and require 

your employees to use. 

In fact, it wouldn’t be surprising if, and I’m sure it’s true, the 

companies involved in this have their own systems that do that. 

Like many other efforts to get the government up to speed in software systems, they need to do more. 

Senator COLEMAN. I would appreciate it if you could help me a 

little with the history here. The report, ‘‘Through the Looking 

Glass,’’1 that was one that was commissioned or developed by Citizens Against Government Waste? 

Mr. SCHATZ. Right. 

Senator COLEMAN. You can go through a little history of this 

thing. When it was first developed, was it intended to be an endto-end system, that $263 million figure? 

Mr. SCHATZ. It’s our understanding that is correct; yes. 

Senator COLEMAN. At that time, was the question of ownership 

at issue? 

Mr. SCHATZ. I’m not certain about that. The ownership issue 

came up in the court case, as you mentioned. The Department of 

Justice said it’s owned by the contractor. We have heard differing 

views on that. We have not seen anything that confirms it one way 

or another. 

Senator COLEMAN. I believe as I reflected on the court decision, 

in part it seemed to me that one of the reasons the judge didn’t 

just pull the plug on this system was his belief that, in fact, it was 

owned by Northrop. And in doing so, the government would have 

had to start from scratch? 

Did you have a chance to read the decision? 

Mr. SCHATZ. Yes, that is our understanding. That was one of the 

reasons that even though he found that it violated the Competition 

in Contracting Act, he said it would cost another $500 million to 

develop another system, which we would argue is not quite the 

case based on systems produced by other companies that would be 

available. 

Senator COLEMAN. And yet development costs are now, as I understand it, the Federal Government is paying for the development 

costs of creating this end-to-end system. Is that a correct statement? 

Let me raise the issue of cost to deploy. The judge obviously concluded that because the system was not owned by the government, 

15

that there would be significant costs—my question was when the 

contract was first developed, where was the responsibility for development costs? 

Mr. SCHATZ. Development costs were with the contractor, not 

with the government. 

Senator COLEMAN. So the development costs were not intended 

initially to be government development costs? 

Mr. SCHATZ. That’s correct. That’s why the taxpayers are ending 

up paying more than they probably would have, given the fact that 

we don’t have full usage and it was supposed to be a transactionbased fee, not a development fee. 

Senator COLEMAN. One of the things that you’ve done, which 

some people I know have contested, but you actually—your organization gave an estimate of costs per transaction, very significant 

costs. I believe it was about $33,000. 

We can debate that, but can you explain the process by which 

you come to that figure? 

Mr. SCHATZ. It was based on the amount of money paid by the 

government and the usage by travelers. That number, I’m sure, has 

changed because there is more usage, authorizations, vouchers 

being processed. That number would have to be updated. We’d certainly like to see what the actual number is, and then you can say 

all right, we have spent $200 million or whatever it might be. It’s 

processed this many transactions. Therefore this is the cost per 

transaction to date. That will change in the future. 

Senator COLEMAN. With greater utilization. 

Mr. SCHATZ. Right. But again, full utilization is what they were 

looking for. I think to get from $33,000 to zero in your savings is 

a long way to go. 

Senator COLEMAN. The question, Mr. Langsfeld, about the ability 

to get the lowest cost, available cost out there, that has a significant impact on total cost; is that correct? So for instance, I believe 

that testing showed that flights booked by DTS could cost as much 

as $1,200 more per ticket. Is this something that your group looked 

at? 

Mr. SCHATZ. Yes. We’ve heard since then that this is still the 

case. Even in the last week or so we’ve received some information 

that indicated——

Senator COLEMAN. Again, speak very loud so folks in the back 

can hear. Can folks in the back hear? The microphone is not functioning. 

Mr. CARPER. What did you say? [Laughter.] 

Mr. SCHATZ. Yes. There are some indications that some of these 

tickets are being provided at a substantial cost over what other 

systems can find. That’s something else we would certainly urge 

the Inspector General, DFAS and others to look into, so that we 

can see whether or not this is still the case. We have heard that 

it is. We would like independent verification of that from people 

that are in charge of monitoring the system. 

Senator COLEMAN. Mr. Langsfeld, did your study touch at all on 

that? You’ve looked at some other systems and cost savings. Were 

these systems in place in other government agencies? 

Mr. LANGSFELD. Your question being? 

16

Senator COLEMAN. The question being the incidence of overpaying, of not paying the lowest available fare. How significant 

that is, and whether there are other systems that simply do a better job of correcting that or identifying that? 

Mr. LANGSFELD. I think even some background would help. In 

our experience, we’ve worked with hundreds of private sector companies, some very large and some very small. But the bottom line 

is it’s always a challenge to find the lowest fare. Just focusing on 

finding the City Pair Programs, as we talked about, is not effective. 

It’s a very good baseline, but it’s only that. 

We found that carriers that have City Pair fares, let’s say United 

Airlines, from Point A to Point B, they’ll even have fares that are 

lower than the City Pair Program. But in the case of most of these 

systems, we didn’t find that being displayed for whatever reason. 

We also find that there are significant other comparable fares 

that government travelers could take, that are totally compliant 

with your terms and conditions, that would significantly save 

money to the U.S. taxpayer and to the U.S. Government. 

Senator COLEMAN. Is the airline pricing system so complicated 

that we do not have the computer capacity available to actually 

identify at a touch of a button the lowest available fare? Is it that 

complicated? 

Mr. LANGSFELD. It’s certainly complex. On the average, about 

100,000 to 150,000 changes to the system a day are made. So you 

have to have a computer system, if you may, to keep up with the 

computer systems. In this case, these systems just want to go 

against each other. They’re only as good as their resource and their 

source data. 

Senator COLEMAN. What I’m trying to understand is again, we 

are spending hundreds of millions of dollars here. Do we have the 

capacity? Was the money well spent? If we identify here’s what we 

want to get, this is the end-to-end system, and among the end-toend pieces of that system, one of them is going to be lowest available fare. Do we have the technical capacity? Is that there, in order 

to identify lowest available fare? 

Mr. LANGSFELD. At this point in time, it has not been demonstrated to be available. 

Senator COLEMAN. I’m not talking about in this system, but in 

any system? 

Mr. LANGSFELD. Yes, it is available. 

Senator COLEMAN. It would be available? 

Mr. LANGSFELD. Yes, and you can get it. 

Senator COLEMAN. Your point is we’re not getting it in this system, but it’s available? 

Mr. LANGSFELD. Yes, sir. 

Senator COLEMAN. Mr. Schatz, let me just talk to you about the 

cost of pulling the plug. I’m not saying that to speak out, but I 

think you have to put that on the table. When I was Mayor of St. 

Paul, we went through a change in our computer systems. And at 

a certain point in time I looked at literally millions that was spent 

and then had to make a decision as to whether to keep spending. 

I made a decision to pull the plug. Some people, you’re mayor, you’ve already spent over $1 million. 

But as I looked at the ongoing costs and what we were getting, and 

17

the problem is that we weren’t getting what we contracted for. So 

I made the decision to cut our losses. 

It appears to me that along the way there have been some discussions in some of these reports, and maybe you can refresh my 

memory, where a decision was made to say hey, at this point it 

may be best to pull the plug. 

I’m going to ask you to kind of walk me through that, but then 

I want to look to the future. I believe this system is up for bid 

again next year. Is that correct? 

Mr. SCHATZ. Yes, certain aspects of it. Yes, the operation and 

maintenance and other aspects of it, yes. 

Senator COLEMAN. Can you give your best assessment now? Or 

first of all, along the way, would there have been a time to pull the 

plug, based on your review of this? And what would you recommend as we move forward? 

Mr. SCHATZ. Mr. Chairman, there were two opportunities, we 

think, earlier on. July 2002, the Inspector General estimated the 

cost had grown from $263.7 million to $491.9 million, 87 percent 

higher than the original contract. The IG also said that DTS, and 

this is a quote, ‘‘remains a program at high risk of not being an 

effective solution in streamlining DOD travel management process.’’

That certainly would have an opportunity then, based on the IG’s 

recommendations, to take a good hard look and possibly pull the 

plug and do something else. 

In December 2002, the Program Analysis and Evaluation Office 

followed up on the IG’s findings and recommended that DOD consider commercial e-travel systems that were now available but 

were not available at the time of the original contract awarded to 

Northrop. 

So despite these two reports from their own internal offices, 

DOD—and I guess in this case, the Program Management Office 

for DTS—decided to move forward anyway. 

As to whether it’s cost-effective now to pull the plug, I honestly 

could not give you an answer to that. Perhaps your next witnesses 

can. Because now we’re many years into this arrangement and we 

have certainly seen this occur with Virtual Case File and others, 

where it was just such a mess that they decided it was not worth 

the additional cost to complete it because they could either do 

something better or possibly something more effective. 

Senator COLEMAN. Last question in follow-up, are there alternative off-the-shelf systems? Either to you, Mr. Schatz or Mr. 

Langsfeld. Are there private side off-the-shelf systems that would 

be more user friendly, more effective, more cost efficient? 

Mr. SCHATZ. There certainly has been a discussion about having 

DOD use the GSA e–Travel systems. There’s questions about the 

interfaces that have already been established. So that is, I think, 

something that the Subcommittee and its experts in DOD should 

take a good look at. 

But certainly based on what we’ve seen, there are systems that 

can provide lower fares. 

Mr. LANGSFELD. In response to your question, Mr. Chairman, I 

believe that there are alternative systems out there. I believe that 

the design of the DTS system and also the design of the other govVerDate 0ct 09 2002 09:54 Feb 01, 2006 Jkt 024241 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 C:\DOCS\24241.TXT SAFFAIRS PsN: PAT
18

ernment systems, where one of their base points was to go off-theshelf, Commercial off-the-shelf, COTS programs. They are available. They’ve been proven in the public marketplace. And the idiosyncrasies or the uniqueness of the government travel can readily 

be adapted to be responsive to the government needs. 

So yes, there are ways to get to it. And I think there should be 

better ways to get and access that information. 

Senator COLEMAN. Thank you, gentlemen. My Ranking Member 

is here. I know he’s in a full Armed Services Committee meeting, 

where he’s also the ranking member. Senator Levin. 

OPENING STATEMENT OF SENATOR LEVIN 

Senator LEVIN. Mr. Chairman, thank you and thanks to Senator 

Carper for allowing me to jump in here out of turn. I will be very 

brief because I have to return to the Armed Services Committee. 

First, I want to commend you, Mr. Chairman, for digging into 

this issue with your usual determination and thoroughness. It is a 

very important issue. You are not only bringing to light the deficiencies in a particular system, but this Defense Travel System is, 

I am afraid, too typical of the Department of Defense’s efforts to 

acquire major new business systems. It has been plagued by poor 

planning, schedule delays, increasing costs, and performance deficiencies. So you are not only going to hopefully address the problems in a particular system, but you are also through this effort of 

yours providing some real insight into the problems with the acquisition system overall inside of the Department of Defense. 

I think my entire statement has been made part of the record. 

If it has not been, I would ask that it be made part of the record. 

Senator COLEMAN. Without objection. 

[The prepared statement of Senator Levin follows:]

PREPARED STATEMENT OF SENATOR LEVIN 

Mr. Chairman, thank you for convening this important hearing and for the oversight that you are providing in a critical area of DOD operations. Every year, the 

Department of Defense spends roughly $20 billion to develop new information systems and to operate and maintain existing information systems. Like so many other 

DOD programs, the Department’s IT programs are troubled by cost overruns, schedule delays, and performance deficiencies. 

The Defense Travel System (DTS) is no exception. When DTS was first conceived 

in the mid-1990’s, the DOD travel system was a complete mess. Individual components of the Department entered their own arrangements with different travel companies, each of which had its own processes, systems and procedures. The travel 

process was paper intensive, with written travel orders required before the trip and 

written requests for reimbursement filed at the end of the trip. The travel process 

was separate from the voucher and payment process, which was itself separate from 

the financial accounting process. Management controls were lacking, and financial 

records were inaccurate and incomplete. 

DTS was conceived as an easy way to address these problems by taking advantage of commercial-off-the-shelf (COTS) technology. Rather than developing its own 

unique travel system, the Department would pay a contractor to use a commercially-available system on a transaction-by-transaction basis. DOD was so confident 

in this approach that it originally envisioned that system would be up and running 

within 120 days of the effective date of the contract. 

It was a good idea. Unfortunately, it ran up against reality. The Department of 

Defense has its own unique travel rules, and individual components of the Department have their own unique requirements and practices. Before DOD could use 

COTS technology, it would have to reengineer its travel practices—and the COTS 

technology itself would have to be modified—so that the two would match. Moreover, DOD wanted more than just a travel system. It wanted an ‘‘end-to-end’’ system 

that would be integrated with the voucher and payment process and with DOD fiVerDate 0ct 09 2002 09:54 Feb 01, 2006 Jkt 024241 PO 00000 Frm 00024 Fmt 6633 Sfmt 6621 C:\DOCS\24241.TXT SAFFAIRS PsN: PAT
19

nancial accounting and management systems. The requirement for an end-to-end 

system meant that DTS would have to interface with dozens of unique DOD accounting and management systems. While these are laudable objectives, consistent 

with congressional policy, these interfaces would also require extensive modifications to the COTS system. 

As we have seen over and over again, once DOD starts to modify COTS technology, it is not really ‘‘off-the-shelf’’ at all. As a result, schedules start to drag out 

and costs start to escalate. 

That is exactly what happened with DTS. More than 7 years after the initial DTS 

contract was awarded, the system still is not fully functional. The contract has been 

re-written to convert it from the original fixed-price, performance-based services contract to a development contract for the acquisition of a DOD-unique system. And, 

as is all too typical of DOD business system development programs, DTS appears 

to be deficient in meeting user requirements by providing the appropriate lowest 

cost fares for government travelers. DOD says that these problems can be fixed, but 

we do not know how much those fixes will cost or how effective they will be. 

It is my hope that the Department will learn from its experience with DTS, and 

from this hearing, that it must do a better job of planning its IT acquisitions at the 

outset. The Clinger-Cohen Act of 1996 eliminated a cumbersome GSA review process, enabling DOD to purchase information technology (IT) products and services for 

itself, in a more efficient, streamlined manner. At the same time, the Clinger-Cohen 

Act required the Department to institute its own measures for business process reengineering, analysis of alternatives, economic analysis, and performance measures 

for their systems. Congress also expected individual agencies to take the steps necessary to ensure that their IT systems would be secure and compatible with each 

other. 

Unfortunately, as shown by the DTS acquisition and so many others, DOD has 

failed to live up to its planning obligations under the Clinger-Cohen Act. I do not 

know whether DOD should pursue DTS to completion at this point, or whether we 

would be better off scrapping DTS and starting over from the beginning. The Department itself must do the cost-benefit analysis needed to make that decision. I do 

know that we can and we must do a better job of developing and fielding IT systems 

in the future. 

I look forward to the testimony of our witnesses.

Senator LEVIN. Again, I want to thank you and commend you 

and your staff and our staffs for working on this together. 

Senator COLEMAN. Thank you, Senator Levin, and thank you for 

all the work you and your staff have done. I should compliment 

them. I think we have a good bipartisan relationship when it comes 

to dealing with fraud, abuse, and misuse of taxpayer dollars, so I 

thank you very much. 

Senator Carper. 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. Mr. Chairman, I just learned during the course 

of the early part of the hearing is the audio was coming in and out 

for our guests here today. This room has been revamped and this 

whole platform up here has been redone. It was out of commission 

here for several months. The folks who actually have been probably 

been working on this Defense Travel System actually worked on 

the audio. [Laughter.] 

I don’t know what to make of that, but on a more serious note, 

I thank our witnesses for being here. I, too, have a statement and 

I would ask that it be made a part of the record, Mr. Chairman. 

Senator COLEMAN. Without objection. 

[The prepared statement of Senator Carper follows:]

PREPARED STATEMENT OF SENATOR CARPER 

Thank you, Mr. Chairman, for holding this hearing. 

Despite the heroic performance of the men and women in our armed forces on the 

battlefield over the years, DOD has had difficulty meeting basic standards for finanVerDate 0ct 09 2002 09:54 Feb 01, 2006 Jkt 024241 PO 00000 Frm 00025 Fmt 6633 Sfmt 6621 C:\DOCS\24241.TXT SAFFAIRS PsN: PAT
20

cial and organizational management. These failings have likely wasted billions of 

dollars that could have been used to improve the lives or better protect the health 

and safety of military personnel. 

This isn’t a new problem. GAO has been warning us about some of these problems 

for more than a decade now. We’re now at the point where 14 of the 25 most severe 

management challenges in the Federal Government highlighted by GAO every 2 

years in its high risk series are challenges currently facing DOD. Things have gotten so bad now that the department’s efforts to address the management challenges 

that have been highlighted by GAO over the years are now on the high risk list 

themselves. 

Senator Coburn and I intend to look into the financial side of some of DOD’s management problems in the very near future through our leadership roles on the Financial Management Subcommittee, and I thank him for his commitment to work 

with me on those issues. I’m pleased then, that we’ll be using the resources on this 

subcommittee to get to the bottom of what’s going on with the Defense Travel System. 

Like most of the murky areas at DOD, the Defense Travel System has been a 

much-studied question mark for some time now—about 10 years. There’s a lot of 

conflicting information out there about how much the system will cost, how much 

it will save DOD, and how well it works. I think we’ll even hear some conflicting 

testimony today on these points. But what’s clear at least to me so far is that DOD 

hasn’t been able to prove that the development of this system, as it’s currently envisioned, is in the department’s best interests. 

Mr. Chairman, I don’t think I have enough information right now to be able to 

answer the question posed in the title of this hearing—‘‘boon or boondoggle?’’ I know 

DOD is busy working out some of the kinks in the Defense Travel System and may 

have already addressed some of the concerns that have been raised by GAO and 

others. We owe it to the taxpayers, however, to make sure that the money DOD is 

spending on this system will pay off in real savings at some point. 

Thank you again for focusing on this issue.

Senator CARPER. I am sort of like you. In my old job, I was the 

governor of a State. I remember any number of technology projects 

and information projects we got into where we got to the point 

where we said, do we want to continue to put money down this 

deep, dark hole or to pull the plug or just do something else? I 

don’t know if we are at that point for this one, but I am sure it 

is a question that needs to be asked. 

I hope that we will have an opportunity to hear from, and maybe 

it is later today, from folks within DOD who have been part of 

overseeing the development of this system who can tell us whether 

it is worth all the time and the money and the trouble that it is 

causing or if there is a better option. 

If you are in our shoes, a recovering mayor, recovering governor, 

what would you do? 

Mr. SCHATZ. Well, you are doing the first step that you need to 

take, which is to have the hearing. There have been reports, there 

have been, as I said a minute ago, opportunities to do something 

about this earlier, in 2002. So again, the question is, here we are 

3 years later. Have we spent so much that we have to continue? 

What is in the contract? What are the penalties? We have canceled 

contracts, paid penalties, and moved forward. That is not unprecedented. 

But I think your next panel and the further investigations you 

have requested, also the questions that haven’t been answered for 

the last year since Senator Coleman and Senator Coburn have been 

asking them, and I know you have been involved, as well, and we 

appreciate that very much. 

It is at a crucial point, I guess is the bottom line. Within the next 

year, in a sense, that is kind of it. So something, if it is going to 

21

be done, needs to be done soon, and sooner meaning in the next 

few months, not in the middle of next year. 

Senator CARPER. All right. Mr. Langsfeld. 

Mr. LANGSFELD. I agree with his comments. I think the process 

we are going through right now is important. The resolution of 

this, if you were in the commercial world, you would have been 

fired. 

In essence, what you are doing, this is recoverable, certainly, and 

I think there are some good issues and there is good product out 

of this. I think it is recoverable there. At a point in time, I think 

you need to get beyond the appropriations voucher and authorization side and get into the travel savings. To save $15 in transaction 

fee and to leave $1,000 for the airline ticket on the table is illogical 

to me and I can’t find a resolution for that. So I think you need 

to get to a system that is going to be able to do that. 

I think DTS system, in my definition, is what I call closed architecture. Therefore, they have modified code in such a way that everything has to be changed when something—one thing is changed, 

they have to go in and change code. It is not a COTS drop-in system where you could just bring in a new module and put it in. I 

think those are some of the solutions that we found in the public 

sector to be very effective. 

Senator CARPER. All right, good. Thank you very much for that. 

I am sure the Department of Defense didn’t set out to have this 

kind of problem. They wanted to solve a problem and didn’t want 

to create one, and I am sure they didn’t want to spend all of this 

money. I am also certain that DOD isn’t the first large organization, either public or private, that has attempted to find some 

paperless, more streamlined method of handling employee travel. 

Let me just ask what mistakes—you have spoken to this to some 

extent, but let me ask again. What mistakes has DOD made here 

that other departments or private sector businesses have avoided? 

Mr. SCHATZ. Do you want to answer that? 

Mr. LANGSFELD. I will be glad to. I think, first of all, I mentioned 

the closed system, closed architecture. In this changing era, as Mr. 

Coburn has—Coleman has referenced——

Senator CARPER. Senator Coburn. A lot of people call him 

Coburn. 

Mr. LANGSFELD. And I just got caught doing it myself. I apologize. 

Senator CARPER. When they start calling me Coburn, we will 

really worry. 

Mr. LANGSFELD. I think I will go back to ‘‘sir.’’ [Laughter.] 

The reference of what has been expended and where you have 

gotten to at this point in time, I think on the appropriations-authorization side, the vouchering system in itself has been a good 

tool and I think there are some strong savings in there. What we 

have found in the private sector, for example, is—let us say for 

that City Pair Program that we talked about with 78 percent variance, literally a travel manager of a, probably what I would consider the second-largest private employer in the world, at 1 percent, I would have called the person in on the carpet and disciplined them. At 2 percent, they would have been released. 

22

I think you need to go in and have some good oversight and what 

you need to do and what we have done in the private sector successfully is gone out and dropped in a new module when one module doesn’t work. In this case, it is the booking system. There are 

commercially available products that can be adapted and integrated, and I think at a much lower cost than where some of your 

projections could be to correct the existing system. 

Mr. SCHATZ. Unfortunately, Senator, these problems have existed 

for some time and continue to exist. There were many Acts in the 

1990’s that were intended to streamline the procurement system 

and improve it. In this case, because of the way that the contract 

was changed, and it was called a cardinal change by the court, 

meaning that it did violate the Competition in Contracting Act, this 

is a little bit more than just a kind of questionable software system. There are issues with how this all occurred that really underlie the entire procurement system. 

So you have obviously a question, what do you do about this, and 

the other question is, how do you prevent that from occurring 

again, where we go from a system where the contractor was supposed to develop it at its cost and get paid per transaction to where 

they are getting paid for development and may end up having been 

paid more than they would have gotten based on the transactions. 

So that is something else to keep a very close eye on. 

In terms of the expertise of others as to the better systems, at 

least obviously Mr. Langsfeld feels that there is something else out 

there, and from what we have seen, there are systems that work 

better. As to whether you could just drop it into DOD, it is something for the DOD people to answer. 

Senator CARPER. One more question. Is DOD travel, is it more 

complicated or expensive given the scope of their operations and 

flying around the country or around the world? Is it more complicated or expensive maybe through regulations that they have or 

mandates that maybe the Congress has put in place, or is it that 

the Department just hasn’t done as good a job with this travel system that they could have? 

Mr. LANGSFELD. I think it is more the latter than the former. 

There are complexities in U.S. Government travel that are 

unique—the Fly America Act, the City Pair Program to try to do 

it as efficiently as possible, other factors, other accounting issues 

that are in concern, that you have to appropriate and you have to 

escrow your monies for travel, and the vouchering system has 

unique FAR rules and DOD rules that are there. But I would say 

at the end of the day, travel is travel and finding the lowest rate 

and finding the lowest hotel and finding the lowest car rental is 

pretty much a very direct issue. It sits out there. All you are doing 

is looking at the inventory and selecting it. 

I think that is a very basic step to do, and the only thing you 

have to do in the government arena and the government sector is 

you have to apply a few more rules than you might have to the 

public sector. Other than that, I would facetiously say that probably half your travelers are looking at Orbitz when they call your 

travel agent at this current time. I do. I mean, these people know 

what is out there. They look at what is available. I think your travelers are savvy enough to be able to figure that out pretty easily. 

23

Senator CARPER. Thank you. 

Mr. SCHATZ. Senator Carper, I did mention earlier that DOD is 

essentially at fault for all of this, for changing the nature of the 

contract, for not requiring the lowest fare, and in general for having so many incompatible financial systems, something that this 

Subcommittee and the full Committee has looked at for many 

years. That would help resolve a lot of these issues, again a broader one, but one that really gets to the basis for a lot of these problems that occur when software systems are introduced into the 

Federal Government. 

Senator CARPER. Thanks. Chairman Coleman, back to you, sir. 

Senator COLEMAN. Thank you very much, Senator Carper. 

Just two quick observations. One is a comment you made, Mr. 

Langsfeld, that I think is pretty important here. This system does 

save money on transaction costs, $15, right, $5 web-based, $15 traditional. 

Mr. LANGSFELD. Right. 

Senator COLEMAN. So it does save money on that, but I think 

your comment is important, that we are up front with saving the 

money on a transaction, but if you are going to be spending $1,000 

more on a ticket if you don’t have this end-user system, then something is wrong. Then we are not getting bang for the buck. 

The other comment about the 78 percent being acceptable, I get 

very frustrated. We make a joke about it is not bad for government 

work, but we really should expect the best for government work. 

Mr. LANGSFELD. And you can achieve the best, sir. 

Senator CARPER. It is funny you say that, Mr. Chairman, if I 

could. In our Administration, maybe in yours, as well, back in St. 

Paul, whenever people would say, ‘‘That is good enough for government work,’’ we would fire them, and we would hire replacement 

people whose motto was, ‘‘If it isn’t perfect, make it better.’’

Senator COLEMAN. And lastly, I just want to raise one thing that 

you made a comment on, and you didn’t pursue it, but there was 

a concern raised at one point, without casting aspersions, but I just 

want to raise the issue about folks who worked for the Department 

of Defense, then went to work for the contractor, that kind of revolving door. That was a concern in this contract, is that fair to 

state? 

Mr. SCHATZ. Yes. There is a concern. There is—again, the questions, I think, have been asked but not answered. I don’t have the 

answers, but we are certainly happy to ask the question. We did 

see that in other cases. We are not saying anything like that is occurring here, but we don’t know, I guess is the bottom line. Certainly, the IG, at the very least, should be looking into that, and 

hopefully they will be conducting another investigation in regard to 

this contract. 

Senator COLEMAN. I just think this is the issue of individuals 

who are senior places in the Department of Defense and then go 

work for the contractor that gets the contract or modifications to 

the contract that are not very transparent. Actually, I think, there 

is an extra responsibility where you have that kind of revolving 

door to be acting in a way that doesn’t even raise those issues. I 

think it undermines public confidence in the systems, and certainly 

those questions will be looked at and will have to be responded to. 

24

1See Exhibit No. 8, which appears in the Appendix on page 375. 

Gentlemen, I thank you. Your testimony has been very helpful 

and I am very appreciative. Thank you. This panel is excused. 

The third panel, what we are going to do is simply going to 

swear in the panel members, maybe have testimony from one person, and we are going to adjourn at 11:15. We are supposed to be 

in our seats by 11:20 for a very important, historic vote at——

Senator CARPER. What vote is that? 

Senator COLEMAN. I will tell you how to vote on the way out, 

Senator. [Laughter.] 

Senator CARPER. You already have. 

Senator COLEMAN. I would now like to welcome our final panel 

of witnesses for today’s hearing: Thomas F. Gimble, the Acting Inspector General at the Department of Defense; Dr. Scott Comes, 

the Director of DOD’s Strategic and Program Analysis and Evaluation Division; McCoy Williams, the Director of the Government Accountability Office’s Financial Management and Assurance Team; 

and finally, Zack Gaddy, the Director of DOD’s Finance and Accounting Services. Gentlemen, I appreciate your appearance today 

and your testimony and your perspective on the Defense Travel 

System. 

I do have a letter from David Chu, the Under Secretary of Defense for Personnel and Readiness, and I will read the letter here, 

but do want to note that there has been certainly an increased 

level of response from the Department of Defense from the time 

that we put this hearing together, and I do appreciate that.1

Letter read by Senator Coleman follows:

Dear Mr. Chairman, I want to thank you and members of the Subcommittee for 

your interest in the Defense Travel System. My office will soon assume a new and 

significant role for this system as part of our continued effort to strengthen management and oversight in a phased plan. 

As we assume functional oversight of the entire program, our first order of business is to assess the DTS program viability. Specifically, we will assess whether 

DTS is delivering increased efficiencies, improved services, and achieving cost savings. In doing so, we will study carefully the several reports and evaluations of the 

system before we take any action, including reviews of the Committees of Congress 

before we proceed. 

The Department clearly understands that we have many challenges ahead in 

making our travel program more efficient and cost effective. Indeed, the Defense 

Travel System represents a whole new way of doing business for government and 

we must ensure that promises and goals envisioned are achievable. We will take the 

necessary steps to resolve problems. 

I look forward to continuing to work with you and your Committee on this important program and will provide you with the conclusions of my analysis. 

Sincerely, 

David S. C. Chu, 

Under Secretary of Defense for Personnel and Readiness.

So I am pleased that the Department of Defense has chosen to 

cooperate with the Subcommittee, work with us in resolving these 

concerns. Clearly, the Subcommittee, though, will continue its oversight to ensure that DOD’s actions match its promises. 

Gentlemen, pursuant to Rule 6, all witnesses who testify before 

the Subcommittee are required to be sworn in. Will you please 

stand and raise your right hand. 

25

1The prepared statement of Mr. Gimble appears in the Appendix on page 60. 

Do you swear the testimony you are about to give before this 

Subcommittee is the truth, the whole truth, and nothing but the 

truth, so help you, God? 

Mr. GIMBLE. I do. 

Mr. COMES. I do. 

Mr. WILLIAMS. I do. 

Mr. GADDY. I do. 

Senator COLEMAN. Thank you very much. I think you are aware 

of the timing system. Again, we will begin with the testimony, but 

we will break at 11:15. We will start with Mr. Gimble and then 

proceed across. 

Mr. Gimble, why don’t you begin first. 

TESTIMONY OF THOMAS F. GIMBLE,1 ACTING INSPECTOR 

GENERAL, U.S. DEPARTMENT OF DEFENSE 

Mr. GIMBLE. Mr. Chairman and Members of the Permanent Subcommittee on Investigations, thank you for the opportunity to appear before the Subcommittee today to address the questions regarding our July 2002 audit report, ‘‘Allegations to the Defense 

Hotline on the Management of the Defense Travel System.’’

We conducted the audit in response to allegations made to the 

Defense Hotline. In summary, we concluded that DOD should have 

managed the Defense Travel System Program as a major automated information system program and ensured that it met the requirements of the Clinger–Cohen Act, DOD acquisition policies, 

and security policies. 

Before I begin discussing the Defense Travel System, I would 

like to provide information on other acquisition efforts where we 

identified systemic problems pertaining to the information of technology acquisition during the period of October 1996 to March 

2000. Those systemic problems included: Inadequate documentation and validation of system requirements, inaccurate life-cycle 

cost analysis or incomplete cost data, incomplete analysis of alternatives to assure that the programs were the most cost-effective solutions, improper categorization of systems for oversight purposes, 

and incomplete or nonexistent acquisition program baselines to 

record cost, schedule, and performance goals. Many of these issues 

were present in the Defense Travel System acquisition. 

Additionally, we believe that the Defense Travel System acquisition also faced significant challenges in using commercial off-theshelf software that required substantial modifications. We reported 

similar challenges on the Standard Procurement System and the 

Defense Integrated Military Human Resources System. 

The Defense Travel System was envisioned as a general support 

system designed to make business travel quicker, easier, and more 

efficient by providing automated commercial and government travel support services to the DOD travelers. By early 1999, as indicated in our audit report, it became evident that the commercial 

off-the-shelf software required major development and modification 

in order to meet the DOD requirements. In February 2002, the Program Management Office requested approximately $377 million to 

manage and develop the program for fiscal year 2002 through 2007, 

26

of which $186.5 million was for research, development, test, and 

evaluation. 

As stated in the 2002 audit report, the Defense Travel System 

was at high risk for not being an effective solution to streamlining 

the DOD travel management process. Further, the Defense Travel 

System experienced significant testing and deployment problems 

which were compounded by the need for significant but unplanned 

developmental efforts. 

The Program Management Office terminated the November 2000 

operational assessment because 72 discrepancies and substantial 

deployment problems were identified. In October 2001, the Joint 

Interoperability Test Command reported in the second operational 

assessment that it did not consider the Defense Travel System to 

be an operationally effective system for all DOD components. In FY 

2002, DOD revised its deployment plan and reduced the number of 

deployment sites. 

The Clinger-Cohen Act of 1996 and the DOD acquisition policy 

provide an effective framework for the management of information 

technology investments. Information on cost, schedule, and performance required by the DOD acquisition policy would also be 

needed by the Chief Information Officer in performing the responsibilities under the 1996 Act. However, DOD had not viewed the 

Defense Travel System as subject to DOD acquisition policy for a 

program because its capabilities were based on commercial off-theshelf software, and therefore cost, schedule, and performance information had not been obtained. 

In June 1997, the DOD CIO designated the Defense Travel System as a special interest initiative. DOD did not consider special 

interest initiatives subject to DOD acquisition policy. 

In January 2001, the Under Secretary of Defense for Acquisition, 

Technology, and Logistics and the DOD Comptroller recommended 

a reassessment of the system because of the deficiencies identified 

during acceptance tests. They required the Army to specify the actions needed on the contract based on the results of a functional 

and technical assessment of the system. In April 2001, the Army 

Communications–Electronics Command became responsible for the 

contract, to include contract restructuring. In July 2001, the Under 

Secretary of Defense for Acquisition, Technology, and Logistics and 

the DOD Comptroller approved proceeding with the Defense Travel 

System and identified that they would retain oversight responsibility of the program until the contract actions were completed. 

We had recommended the designation of the Defense Travel System as a major automated information system program and also 

that the DOD Comptroller complete the Program Analysis and 

Evaluation study by October 1, 2002. The DOD Comptroller had 

tasked the Director of Program Analysis and Evaluation to undertake a cost effectiveness study of the system that would be used to 

determine whether to continue or terminate the system. Additionally, we had recommended, among other things, that the Program 

Management Office comply with the Clinger–Cohen Act. We had 

also asked that the Under Secretary for Acquisition, Technology, 

and Logistics and the DOD Comptroller and the DOD Chief Information Officer (CIO) review the progress made by the Program 

Management Office in developing appropriate acquisition informaVerDate 0ct 09 2002 09:54 Feb 01, 2006 Jkt 024241 PO 00000 Frm 00032 Fmt 6633 Sfmt 6601 C:\DOCS\24241.TXT SAFFAIRS PsN: PAT
27

tion and determine whether the system should continue or be terminated. 

In response to our audit in May 2002, the CIO designated the 

Defense Travel System as a major automated information system 

subject to DOD acquisition policy with himself as the milestone decision authority. In response to our recommendation, the results of 

the Program Analysis and Evaluation study were briefed to the 

DOD Comptroller in December 2002. 

Senator COLEMAN. I am going to ask you, Mr. Gimble, if you can 

just summarize——

Mr. GIMBLE. In December 2003, the CIO issued a Defense Travel 

System Acquisition Memorandum Decision moving the system forward. That concludes my statement. 

Senator COLEMAN. We will have your full statement entered into 

the record. 

Gentlemen, we are going to adjourn the hearing right now. We 

will reconvene when we get back, at sometime between 11:45 and 

12 o’clock. You are sworn in and we will just continue when we get 

back. 

At this point, this hearing is recessed. 

[Recess.] 

Senator COLEMAN. The hearing is called to order. 

Dr. Comes, please proceed. 

TESTIMONY OF SCOTT A. COMES, DIRECTOR, STRATEGIC AND 

INFORMATION PROGRAMS DIVISION, PROGRAM ANALYSIS 

AND EVALUATION, U.S. DEPARTMENT OF DEFENSE 

Mr. COMES. Good morning, Chairman Coleman. My name is Dr. 

Scott Comes. I am the Director for C4 and Information Programs 

in the Office of the Secretary of Defense, Program Analysis and 

Evaluation. 

The Office of Program Analysis and Evaluation conducts independent analysis for and provides independent pre-decisional advice to the Secretary and Deputy Secretary of Defense. In this role, 

one of PA&E’s principal responsibilities is to ensure that the cost 

effectiveness and capabilities of DOD programs are presented accurately and completely. My office has primary responsibility in 

PA&E for conducting such analyses in support of information technology programs, such as the Defense Travel System. 

In July 2002, PA&E was asked by the USD Comptroller to conduct a cost effectiveness review of the Defense Travel System. We 

conducted that analysis and documented our results in a report entitled, ‘‘DTS Cost Effectiveness Review’’ in December 2002. I am 

here today to answer your questions regarding that report. Thank 

you. 

Senator COLEMAN. Thank you, Dr. Comes. Mr. Williams. 

28

1The prepared statement of Mr. Williams appears in the Appendix on page 65. 

TESTIMONY OF McCOY WILLIAMS,1 DIRECTOR, FINANCIAL 

MANAGEMENT AND ASSURANCE, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. WILLIAMS. Thank you, Mr. Chairman. Thank you for the opportunity to discuss our preliminary audit results related to DOD’s 

efforts to develop and implement a standard end-to-end travel system which DOD has been working on for the last 10 years. This 

Subcommittee has been at the forefront in addressing issues related to DOD’s travel management practices, with the hearing 

today being another example of its oversight efforts. 

Our testimony is based on the preliminary results of our audit 

and focuses on the following three questions: Has DOD effectively 

tested key functionality in DTS related to flight and air fare information? Will DTS correct the problems related to DOD travel previously identified by GAO and others? What challenges remain in 

ensuring that DTS achieves its goal as DOD’s standard travel system? 

In addition, our statement for the record provides a description 

of DOD property rights in DTS, as you requested. 

Subsequent to this testimony, we plan to issue a report that will 

include recommendations to the Secretary of Defense aimed at improving the Department’s implementation of DTS. 

Mr. Chairman, DTS’ development and implementation have been 

problematic, especially in the area of testing key functionality to 

ensure that the system will perform as intended. Consequently, 

critical flaws have been identified after deployment, resulting in 

significant schedule delays. Our recent analysis of selected requirements disclosed that system testing was ineffective in ensuring 

that promised capability has been delivered as intended. 

For example, we found that DOD did not have reasonable assurance that DTS properly displayed flight and airfare information. 

This problem was not detected prior to deployment since DOD 

failed to properly test system interfaces. DTS officials have indicated that this problem was fixed in the most recent system upgrade. We are in the process of verifying the effectiveness of these 

corrective actions. 

DTS has corrected some of the previously reported travel problems, but others remain. Specifically, DTS has resolved the problem related to duplicate payment for airline tickets purchased with 

the centrally billed accounts. However, problems remain related to 

improper premium class travel, unused tickets that are not refunded, and accuracy of travelers’ claims. These remaining problems cannot be resolved solely within DTS and will take department-wide action to address. 

Mr. Chairman, we have identified two key challenges facing DTS 

in becoming DOD’s standard travel system: One, developing needed 

interfaces; and two, underutilization of DTS at sites where it has 

been deployed. 

While DTS has developed 32 interfaces with various DOD business systems, it will have to develop interfaces with at least 17 additional systems and this is not a trivial task. 

29

1The prepared statement of Mr. Gaddy appears in the Appendix on page 93. 

Furthermore, the continued use of existing legacy travel systems 

results in underutilization of DTS and affects the savings that DTS 

was planned to achieve. Components incur additional costs by operating both DTS and legacy systems which have the same 

functionality, and by paying higher processing fees for manual 

travel vouchers as opposed to processing the travel vouchers electronically through DTS. 

Mr. Chairman, overhauling DOD’s financial management and 

business operations, one of the largest and most complex organizations in the world, represents a daunting challenge. DTS, intended 

to be the Department’s end-to-end travel system, is a case study of 

some of the obstacles that must be overcome by DOD’s array of 

transformation efforts. Successful implementation of standard business systems such as DTS will be the key to achieving billions of 

dollars of annual savings through DOD transformation. Eliminating stovepiped legacy systems and using cheaper electronic 

processing are critical to realizing the anticipated savings. 

Again, I commend the Subcommittee for holding this hearing as 

a catalyst for improving the Department’s travel management practices. 

Mr. Chairman, this concludes my statement. I will be pleased to 

respond to any questions you may have. 

Senator COLEMAN. Thank you very much, Mr. Williams. 

Mr. Gaddy, you may proceed. 

TESTIMONY OF ZACK E. GADDY,1 DIRECTOR, DEFENSE FINANCE AND ACCOUNTING SERVICE, U.S. DEPARTMENT OF 

DEFENSE 

Mr. GADDY. Mr. Chairman, distinguished Members of the Subcommittee, it is a pleasure to be here to discuss the Defense Travel 

System. I am Zack Gaddy, Director of the Defense Finance and Accounting Service. I am providing detailed information on DTS and 

the scope of the Department’s travel operations in a statement for 

the record. What I want to do now is give you an overview of the 

current status of DTS and how we got to where we are today. 

The Department of Defense launched DTS in 1995. The goal was 

to streamline and improve how the Department managed travel of 

DOD personnel and to replace dozens of independent and inefficient existing travel systems. Initial progress was slower than expected, and the goal of integrated incompatible systems turned out 

to be more complex than originally envisioned. After several reviews and reports, the time frame for full usage of DTS by everyone in the Department, originally scheduled to be completed in fiscal year 2003, was adjusted to a more realistic time frame of FY 

2009. 

In recent years, the Department has made important changes to 

better manage DTS and achieve the ambitious goals for improving 

travel administration. As a result, today, we believe that DTS is 

proving to be a cost-effective solution to our travel needs. DTS is 

enabling us to make our DTS-related processes faster, less costly, 

and better for DOD personnel. It is strengthening accountability 

and internal controls, making our data management more accurate 

30

and less costly, reducing the likelihood of fraud and waste, and 

achieving other benefits. 

In fiscal year 2006, we expect that DTS will save the Department 

over $35 million. Once fully deployed, DTS will have replaced 31 

primary travel systems and eliminated travel processing in another 

12 systems where travel is a secondary function of the system. 

The management of DTS has been criticized in several reviews 

and reports over the past few years. In May 2002, the Department 

designated DTS as a Major Automated Information System to get 

the program on track. This meant that DTS’ progress and problems 

would be subjected to greater scrutiny by the Department’s senior 

leaders. This designation resulted in a comprehensive review of the 

scope of the program and a thorough analysis as part of the Department’s acquisition process and its program budget review. 

Under rigorous scrutiny, the DTS program has met the cost, performance, and schedule goals set for it under its approved program 

baseline. Still, we continue to assess how to strengthen the program and hasten progress. 

To that end, later this fall, we look forward to hearing from the 

Government Accountability Office, which is expected to complete its 

DTS program review, as a source of additional ideas for improvements. We know that we need to continue to monitor the DTS program carefully and to make adjustments. Still, we are beginning to 

see the benefits of the new system. For example, DTS speeds up 

the travel process and facilitates better customer service, maintains 

accountability throughout the travel process, meets our requirements for safeguarding information, and allows DOD organizations 

to monitor their travel budgets more precisely. 

Despite the progress to date, we understand that DTS does not 

currently accommodate all DOD travel requirements. For example, 

DTS does not process all types of travel for permanent change of 

station, group, or mobilization travel. We expect these requirements to be addressed by the end of fiscal year 2006. 

Further, while DTS enhances visibility and auditability for travel, it does not eliminate travelers’ or approving officials’ erroneous 

use or approval of premium travel. 

We also recognize that the travel industry and emerging technologies are changing how travel should be administered. At the 

conclusion of this contract, we plan to competitively award a followon contract that will address these emerging opportunities. 

In closing, I would emphasize that the Department of Defense 

has acted to correct the previous issues with DTS and is providing 

proper oversight to make the best use of taxpayer resources to improve our travel process. We welcome input from the GAO and this 

Subcommittee to help us fulfill our commitment to provide a world 

class travel system for DOD travelers. We appreciate your interest 

in DTS and look forward to working with you in the future. Thank 

you. 

Senator COLEMAN. Thank you very much, Mr. Gaddy. 

Mr. Williams, I think it was in your testimony, you reflected on 

the DOD system being one of the largest and most complex in the 

world and we understand that. 

Mr. WILLIAMS. Yes, sir. 

31

Senator COLEMAN. But even with that understanding, as you 

look at the history of this and where it started and even now we 

are talking looking at originally 2003 for a goal of integrating systems and now it is a goal of 2009, that is a long time. The cost 

started at $263 million to $500 million. Those are the things that 

have obviously raised the level of concern of this Subcommittee. 

One of the questions that has come up, and I think, Mr. Williams, you indicated an answer to it, but I would like it very clear 

for the record, who owns this system? Who owns the DTS system? 

In the court decision, it appeared that Northrop owned it, and in 

fact, the judge specifically raised concerns saying one of the reasons 

we are not going to stop it now is because we would walk away 

with nothing. Was the judge mistaken on that assessment, or is it 

different today than it was then? 

Mr. GADDY. I would like to try to answer your question, Mr. 

Chairman. DTS is owned by DOD. However, when I say that, there 

are aspects of the program where there is software code developed 

by DOD that we own outright. All the interfaces to the accounting 

and finance systems within the Department, we own all of those 

interfaces and all of that software. 

The commercially developed software that Northrop Grumman 

developed, we have an unlimited license to use that software. We 

don’t physically own the software, but we own unlimited rights to 

use that software and we can delegate those rights to any other 

user as a follow-on contract. 

Senator COLEMAN. But, hypothetically, if the contract were to be 

terminated with Northrop, what would DOD be left with, because 

that was the concern of the judge, that we can’t start from scratch 

here. Again, it goes back to the nature of our ownership interest 

on things that have been developed with taxpayer dollars. What do 

we own if it were to be terminated? Can you divide between what 

Northrop would have and what we would have? 

Mr. GADDY. Mr. Chairman, as I said earlier, I believe the correct 

answer is, we would be able to take the software that has been developed by Northrop and turn it over to a subsequent contractor to 

use. 

Senator COLEMAN. Thank you. In Mr. Langsfeld’s testimony, he 

said the system is not cost effective and does not use the best available software. Does anybody want to respond to that, because my 

concern is even if it is deployed, how are you going to realize full 

cost savings, and can this fundamental problem be fixed? First, do 

you see this as a fundamental problem? Do you agree with the testimony? And then, second, if so, can it be fixed? 

Mr. GADDY. I am unable to fully address what Mr. Langsfeld was 

referring to when he said it was not cost effective. I do know from 

his study that he determined the software, DTS, did not display all 

City Pair Contract flights that were available. We took the information he supplied to us. We actually used that information and 

my internal review organization independently looked at the information to determine whether there was a problem with how we 

had configured or established the settings on the displays. 

We, in fact, went and found we have a 4-hour display of 12 

flights, a limitation in the system at the time Mr. Langsfeld did his 

study, compared to other displays which use the 12-hour window 

32

and did not have the 12-flight display limitation. If you widen the 

aperture and look at it in the same 12-hour window, we changed 

that, we believe we find at least 92 percent of the flights that are 

in the City Pair Contract. 

We have since, based on information, revised our program to display a 12-hour window and to display a 25-flight limitation as opposed to a 12-flight limitation, and in November, we will start a 

new change or a new setting that will display City Pair flights 

first. So that way, you always know you get all available City Pair 

flights before you look at other available fares. 

Senator COLEMAN. We don’t have the chart here, but in one of 

his charts, Table 1, he had top 25 domestic City Pairs and he had 

total displayed, for the DTS, he had 33 percent whereas for 

FedTraveler or Government Trip, E2 Solutions, has higher figures. 

Is your testimony that you have made corrections there that would 

change these conclusions? 

Mr. GADDY. Yes, sir, Mr. Chairman. We have gone back and 

looked at what they were reviewing. The flights are available in 

the system, they just were not displayed, and that is what he was 

asked to look at. We have since opened the time frame to 12 hours 

versus 4 hours and the limits on flights from 12 flights to 25 flights 

so that we can display all available flights. 

Senator COLEMAN. He also indicated that he was told that DTS 

only displayed one-third of the available fares, and that was the 8 

percent figure, and then his comment was that DOD told him that 

was completely acceptable. Do you agree or disagree with that? 

Mr. GADDY. I cannot agree that is acceptable, not to display all 

the flights. The 8 percent limitation I believe he was referring to 

are not all flights available, all City Pair flights are in the Global 

Distribution System. Up to 8 percent, I believe, of City Pair flights 

are not currently available in the GDS or Global Distribution System. Therefore, they would not be accessible by any software looking for them. 

Within the context of what was available, the 92 percent that are 

available because of our settings, and I believe that was buried in 

a footnote in his actual table in the report, he said the settings 

themselves would determine what would be displayed, and based 

on those settings, we looked at it and said, yes, you are right. A 

4-hour window does block displaying all available flights, and that 

is why we went in and changed the setting to 12 hours. 

Senator COLEMAN. To a 12-hour window. When you said 8 percent are not in the system, is that in any system? Is there any system that is capable, or is it just the DTS system? 

Mr. GADDY. As I understood his comments, the 8 percent were 

flights not in the Global Distribution System, which is what any 

travel system would go to to find available flights. It is not DTS 

per se or ETS. It is not in the Global Distribution System that the 

systems are querying to find available flights. 

Senator COLEMAN. One of the questions that has come up here 

is utilization of the system. The testimony, and Mr. Williams mentioned it, about continued use of legacy travel systems, higher processing fees, etc. 

Mr. WILLIAMS. That is correct. 

33

Senator COLEMAN. If we know that there are higher processing 

fees with continued use of legacy systems, can you help me understand the under utilization? Why doesn’t the Secretary of Defense 

simply mandate that we start using DTS? 

Mr. WILLIAMS. Mr. Chairman, as currently structured, each of 

the various components within DOD have funding authority. Until 

a decision is made at the top level of the organization that DTS 

will be used once it is implemented, the different components will 

continue to use those legacy systems. Once DTS is deployed and it 

is operational, then it must be used and the legacy systems must 

be cut off, then the utilization rate will go up. 

But there needs to be a decision made at the top, across the organization, that this is going to be the policy. 

Senator COLEMAN. And my concern is we don’t have that decision 

and I am trying to understand the reason for that decision. If on 

the one hand we talk about the system being effective and cost effective, on the other hand we hear there are continued problems in 

terms of getting the end-to-end system that we like, is the reason 

the decision hasn’t been made because there isn’t a unanimity of 

agreement that the system is effective and that it is meeting 

needs? 

Mr. GADDY. Actually, Mr. Chairman, I would like to comment 

further on that. There was a directive signed by the Deputy Secretary of Defense last November directing usage of DTS once deployed to the user sites. You need to understand that when we talk 

about the time frame for deploying DTS—I will use an example. 

Hill Air Force base in Utah has 16,000 employees. We have recently deployed DTS to that site. It will take probably a year to 

fully deploy across all 16,000 users. So one of the reasons you will 

see other systems still in use is it hasn’t been fully deployed across 

all the users at a particular location. 

The directive that was signed last November, however, said DTS 

is the official system for this Department. Prior to that time, various organizations, as Mr. Williams indicated, were making investments in alternative systems. The Reserve Travel System in the 

Air Force comes to mind as an example. There was a decision. DTS 

is the official DOD system. 

However, as you well know, within the Department, you get a directive on top and then the execution of that directive sometimes 

takes a while. One of the factors in it is the deployment of the system itself. It is not fully deployed yet. Another factor is even where 

it has been deployed to particular sites, it is not fully at use in 

those sites quite yet. And the third factor is what I described a little bit earlier, and that is all types of travel are not currently accommodated in DTS, so they will need to use legacy systems until 

other types of travel are folded into the DTS capability. 

At that time, I do believe Dr. Chu, in my conversations with him 

and others, we are pushing very hard that old legacy systems do, 

in fact, need to be shut down and a decision has to be made, for 

example, 60 days post-deployment, full usage has been acknowledged. At some point, you have to terminate the old systems, and 

one of the best ways to do that is just stop funding them. 

34

Senator COLEMAN. Let me then go to the folks on the audit inspection side to see if their perspectives, having looked at this, are 

as optimistic as Mr. Gaddy’s. 

Mr. Gimble, if I can just kind of step back, you originally started 

your evaluation based on hotline complaints, which I found—is that 

something that is usual? 

Mr. GIMBLE. It is fairly usual. We do get a lot of complaints to 

the DOD IG hotline and it is typical, you do get them on systems 

of various kinds, IT systems, weapons systems. 

One thing I would just preface, most of our work on DTS is in 

the 2002 time frame and we just recently started some new work 

on that system. But for the 3 years that intervened there, we really 

hadn’t done much work, so we don’t have much current knowledge. 

We know there were some agreements made on actions that were 

going to be done to bring it into a system-managed arena. We 

think, according to the documentation that we have, that has been 

done. 

Now, we will go back and look and really do some assessments. 

That is the plan that we just started out with in the last week or 

so. In fact, it was at your request and we are going to address the 

follow-up actions to see if those original recommendations were appropriately addressed and achieved the results that we think they 

should have. Also, we will be looking at cost effectiveness and also 

how wide the utilization is. 

Senator COLEMAN. One of the things that I recall, your original, 

I believe that you had an original recommendation that recommended dropping funding for DTS until cost and benefits were 

determined based—is that correct? 

Mr. GIMBLE. In the draft report, we had recommended suspending the funding until the system was determined to be cost effective. 

Senator COLEMAN. And then you dropped that recommendation——

Mr. GIMBLE. Well, what we did is we—I would like to say we got 

an alternate solution there. They agreed to—the Department 

agreed to put the system under an acquisition program, which is 

one part of that recommendation, and the other was they agreed 

to do the cost-effectiveness study, which was done by PA&E. Subsequent to that, our auditors had been redirected into other programs 

and so we relied on the Acquisition Memorandum Decision that 

was signed off in December 2003 that said everything was compliant and moving forward in terms of—it was a major acquisition information system versus a special interest initiative. So we really 

have been pretty dormant in the oversight of this particular system 

since the audit report was issued in July 2002. 

Senator COLEMAN. But one of the things you were waiting on 

was a cost-benefit analysis from PA&E. Do you believe that was 

done? Have you had a chance to review that? 

Mr. GIMBLE. We did not review that. This was over on our followup side and there was documentation that indicated it had been 

performed. When the Assistant Secretary or the CIO of the Department signed off on the Acquisition Memorandum Decision in December 2003 saying that everything was completed, we didn’t go 

35

back and follow it. We closed out and redirected our assets into 

other areas. 

Senator COLEMAN. Dr. Comes, did you consider your work to 

be—at least as I understand it, my review of the record is that the 

Inspector General agreed to drop its recommendation that program 

funding be suspended until costs and benefits were determined. 

Have you seen a cost-benefit analysis? 

Mr. COMES. We looked at the costs and benefits at the time of 

the program. The program was rather immature, so the available 

data to compare on the costs and benefits was rather limited. So 

we focused our efforts on what the requirements were for the program and whether there might be alternative solutions. 

Senator COLEMAN. So would it be fair to say, as I understand it, 

you didn’t have the data to do a cost-benefit—did you do a cost-benefit analysis? 

Mr. COMES. The reason you couldn’t do a cost-benefit analysis at 

the time, it was almost a circular argument. You would need a 

good travel system to collect all of that data. Lacking a travel system, you had no data. So we did what we could with the available 

data that the Program Office had at the time. They had done some 

pilot experiments at a few sites and they had reports for Congress 

that we reviewed to see what was available at the time. 

Senator COLEMAN. I think it is certainly part of my frustration 

is we had a recommendation to stop funding until there was a costbenefit analysis. It is really not possible to do a cost-benefit analysis if you don’t have the system in place to do the analysis. I won’t 

ask where we are at. I think where we are at, and we have sent 

a letter on this in August to the Inspector General to perform a 

cost-benefit analysis. I think it has to be done. 

Mr. GIMBLE. And we started that work this week. 

Senator COLEMAN. Apparently, this contract is going to be rebid 

sometime next year. Can somebody explain what pieces of it—what 

is going to be rebid, is it next August, next year? 

Mr. GADDY. Mr. Chairman, the current contract is set to expire 

at the end of fiscal year 2006. What will be rebid is the follow-on 

contract support to operate and maintain the system, and if there 

are any additional changes to be made, we call it Phase II, travel 

reengineering kinds of things that were talked a little bit about in 

the earlier panel, if any of those things lead to changes, emerging 

changes in the marketplace that we want to adopt within the program through a follow-on contract, we would make those changes 

to the system. 

Senator COLEMAN. Are we confident that we have identified several major problems getting to this end-to-end system that we 

would like, and clearly, they have been recognized that there are 

still some deficiencies in that regard. Do you believe that we need 

to resolve those problems at the time it is rebid? What happens if 

those problems aren’t resolved? I am trying to understand a process here. If you still have issues out there, how do you effectively 

rebid? 

Mr. GADDY. Mr. Chairman, what normally happens with this 

program is we have a series of releases, they are called Presidential releases. The Monroe release will be deployed in the December time frame. The Quincy Adams release will be deployed 

36

sometime in the June 2006 time frame. That is the last scheduled 

release we have for this program. 

Each one of these releases, the intent of it is to improve upon the 

capability of the system to provide even more functionality so we 

can address additional types of travel, for example, Guard and Reserve mobilization travel that is an issue for people. 

What we are looking for in what we call the Phase II follow-on 

is how permanent duty travel is even managed. Some of the things 

that were alluded to here, if we want to change how travel policies—right now, the system is configured to comply on fares with 

the Joint Federal Travel Regulation. If there are changes to how 

travel should be administered, those would be then part of the follow-on contract. 

In the basic sense, however, the intent is to manage the current 

application, operate it, sustain it, and then make any additional 

changes that might be deemed desirable using cost-benefit analysis 

to see if it is worth doing or not. 

Senator COLEMAN. Mr. Williams, I would like to have you address this same question if you have problems, identify them. I am 

trying to get a sense of the measure of resolution required by the 

time a contract is rebid. 

Mr. WILLIAMS. We are looking at about a 12-month time frame 

to go through the procurement process. The process would have to 

be very aggressive, in my opinion. I would say that you would want 

to make sure you do the things that were just described. You want 

to make sure you are doing everything that you can to upgrade the 

system to address those issues along the way. 

We believe that because the system has already been implemented at approximately 5,600 out of the 11,000 locations, that 

Block 1 or Phase 1 should be completed. Once that is completed, 

we think that there should be a process in which there is an oversight, Management Oversight Review Board that needs to take a 

look at the whole DTS process, where do we go from here, and look 

at it from the standpoint of not just DTS, but this is just one component within an overall architecture for DOD and how is it fitting 

in and make some decisions on how the Department should proceed 

with DTS. 

Senator COLEMAN. You indicated that it is presently in 5,600 of 

11,000 locations, but my understanding is it is only used in a small 

percentage of those. So we are not getting 50 percent use. That is 

a 50 percent figure. What is the percent usage right now of DTS? 

Mr. GADDY. You are correct that it is not fully used or utilized 

at all of those locations yet. While it has been deployed to 5,600 

sites, during fiscal year 2005, approximately 8 percent of travel 

tickets were procured using DTS. Today, the usage of the system 

is about 80,000 travel vouchers a month. That number is growing 

at a rate of about 10 to 15 percent per month, so we are seeing 

more and more uses as it goes to more sites——

Senator COLEMAN. What are 80,000 travel vouchers? About what 

percentage of use does that represent? 

Mr. GADDY. Again, looking at five million or so a year, that is 

about a million—so it is about 20 percent in total. But the usage 

is starting to grow because we are going to more sites and more 

users are being trained. There is a one-week training program, for 

37

example, for initial usage at a site. The usage will expand. We will 

finish deploying to all of the major sites during fiscal year 2006. 

Those major sites where the travel—and it is kind of interesting. 

If you look at total usage, 80 percent, roughly, of all travel is performed at those major sites. We talk 11,000, quite honestly, but 

there are probably 200 to 300 locations where about 80 percent of 

all the travel is actually conducted, and those are the targeted sites 

that we are really trying to take the system to first to get it fully 

deployed, fully used, so we can take advantage of the benefits that 

the system provides. 

Senator COLEMAN. My concern is that it is $25—is it $20 or $25 

per transaction without DTS? What is the figure? 

Mr. GADDY. If you use DTS for travel, for example, if you use full 

DTS, no touch, it is about $5——

Senator COLEMAN. Five dollars. 

Mr. GADDY [continuing]. For a travel reservation. If you go to a 

commercial vendor or a commercial travel office, you are talking, 

on average, $25 for the same transaction. 

Senator COLEMAN. It is about a $20 difference? 

Mr. GADDY. Right. 

Senator COLEMAN. You have five million vouchers, $12.2 million 

at $20 more per cost. 

Mr. GADDY. And on the back end, there is a big difference between the actual computation of the settlement, of the travel transaction. DTS is much cheaper. So we know that there is a lot of potential out there, and one of the things you cited, Dr. Chu’s letter, 

as the owner of this area, one of the things, that same decision that 

directed the use of DTS was the establishment of a Travel Management Office within the Department because you have each service 

doing something with its own unique systems, including my own. 

As a result, his organization is now standing up a standard Travel 

Management Office which will assume the responsibility for managing department-wide travel so that we can begin to take advantage of a common application for all users and that is something 

that I very strongly support, that there ought to be one way of 

doing business within the Department. 

Senator COLEMAN. I just want to make sure the record is clear. 

Is your testimony that DTS, that the Department has mandated by 

order the use of DTS? 

Mr. GADDY. There was a directive signed last November by the 

Deputy Secretary that said DTS is the official travel system for the 

Department. 

There is a subject of interpretation, I think, on the part of some 

that says, well, OK, that means I can use what I have got until 

you replace it, which is true. You have to have something that you 

use. But our perspective on it, our Program Management’s perspective on it is as we deploy the system to these sites, once it is fully 

deployed to those sites, then our expectation is we will start shutting down the old systems. I am not sure that we have full agreement of that by the activities that own those systems. 

Senator COLEMAN. Well, I would hope, and it is one of the things 

that we would like—you would think that there would be a common understanding from those at the highest level, if it is being 

38

directed down to—as a military organization, people follow orders, 

don’t they? 

Mr. GADDY. Yes, sir, they normally do. However, what I find interesting about this business is some will claim they have never 

seen the order. 

Senator COLEMAN. Dr. Comes, on page 13 of your report, you 

state, ‘‘It is our understanding that DOD has not bought the rights 

to the software developed for the DTS program. This could potentially limit the number of competitors that may support the Department’s voucher processing in the future.’’ Is there anything you 

have heard today that somehow is contrary to that notion? 

Mr. COMES. That report was written in 2002—in December 2002. 

I am not aware of what has happened in the ensuing time. 

Senator COLEMAN. I raise that, Mr. Gaddy, because of your testimony. Is it your testimony that as of today, that the statement that 

DOD has not bought the rights to software developed for DTS, that 

this could potentially limit the number of competitors that may 

support the Department’s voucher processing in the future? Are 

there limitations on the opportunity for competitors based on limitations on property rights, software property rights? 

Mr. GADDY. Mr. Chairman, there are no limitations on subsequent users or contractors who might want to operate this system 

on behalf of the Department. 

Senator COLEMAN. And part of my concern here is I don’t believe 

that the Department has really bought anything in the interim. 

You are simply giving an interpretation that obviously is contrary 

to—because nothing has changed. There was no purchase of property rights here, right, of software rights? 

Mr. GADDY. Actually, what happened when the contract was restructured and we went from buying a service to buying software 

development, the normal Federal Acquisition Regulation rules 

kicked in that say if it is commercially developed software, we have 

rights to the software. Since then, we have actually gotten a signed 

letter from the contractor that acknowledges that and we are in the 

process of modifying the contract to make sure it specifically clarifies that. But our understanding and interpretation of the FAR is 

when we pay the contractor to develop software on our behalf, we 

have unlimited usage to that software as long as we wish to do so. 

Senator COLEMAN. Mr. Williams, does the GAO have the same 

assessment of property rights as the DOD has? 

Mr. WILLIAMS. As stated in Appendix 1 to my testimony, that is 

consistent with our belief. 

Senator COLEMAN. As we move forward, there is obviously more 

work to be done. The testimony of the Department is certainly 

more optimistic than some of the assessments, as we heard on the 

earlier panel. 

Can we talk just a little bit about cost savings. We are spending, 

as I understand, and I think it is Mr. Comes, is it $537 million? 

Is that the figure? I don’t know where that came from. Was it your 

study, from fiscal year 2001 to fiscal year 2014? Is that a valid figure? Does anybody dispute about $537 million as the amount to 

complete software development in the system? 

39

Mr. COMES. Again, that study was done in 2002. I am not aware 

of what is happening now as far as what the current cost to complete would be. 

Senator COLEMAN. Do we have any estimates of the current cost 

to complete the system? 

Mr. GADDY. Yes. Currently, the system total acquisition costs for 

the whole program is $474 million. 

Senator COLEMAN. And what is the time frame for that? 

Mr. GADDY. Through fiscal year 2006. We have currently expended $402.5 million of that amount. 

Senator COLEMAN. If I went back to Mr. Schatz’s testimony, he 

talked about the original study that this whole thing was $260 million, that it was supposed to be looked at as that amount set aside 

and it was a cost per transaction. Is that simply out the window 

now and we are paying for it, this is our obligation, but Northrop 

runs the system? How does that work? 

Mr. GADDY. Actually, Mr. Chairman, when the contract was restructured, you are correct. Prior to that point, it was a purchase 

of service. After the restructure, we bought software development 

work, program management support, deployment support. So we 

have, in fact, paid $229 million of that contract value, original estimate $264 million, we have expended $229 million of that with 

Northrop Grumman to date. 

Senator COLEMAN. I will bring this portion of the hearing to a 

close. My colleague, Senator Coburn, does have a series of questions, I think he indicated five pages. I am going to keep the record 

open for 2 weeks so that we can get a response to those. 

But just an observation—and I also say that we will conduct a 

follow-up hearing to focus on the later reports that we expect to receive from the Inspector General and hopefully working with Mr. 

Williams, the GAO. 

The concern as I sit here and have reviewed all the materials is 

there has been a concern certainly about process, Mr. Gaddy, and 

that was reflected in some court actions. But there have been concerns about process. There have been concerns about evaluation 

along the way, but many of those evaluations are now dated and 

so we will certainly get more current ones. 

In the end, we want to make sure the system works. That is 

what it is about. If it doesn’t work, then we need to know that and 

we need to have a very honest assessment of that so we are not 

throwing good money after bad. There may be a cheaper, better alternative if it doesn’t work. But if it does work, let us make sure 

that we understand what the limitations are, that we then deal 

with those limitations, and I appreciate the letter from the Under 

Secretary, and then we will go from there. 

As I said, this is simply a step along the road. We have not completed this process. We do appreciate your coming before us, the 

work you have done. We look forward to working with you in the 

future. 

With that, the record will be kept open for 14 days. Questions 

will be submitted and responded to. This hearing is now adjourned. 

[Whereupon, at 12:39 p.m., the Subcommittee was adjourned.] 

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Æ


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